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Update Yingli Green Energy (YGE) in Jubak Picks 50
01/02/2012 3:20 pm EST
The best that can be said for that switch is that Yingli Green Energy was slightly less terrible a pick in 2011 than Sun Tech Power. Shares of Yingli Green Energy were down 61.5% for 2011 while shares of Sun Tech Power were down 72.4%.
I replaced Sun Tech Power with Yingli Green Energy because Yingli had a significantly lower cost structure and I figured that would be important in what looked like a tough year for solar power companies—even in China.
But 2011 didn’t turn out to be just a tough year—it turned out of the part of the worst downturn ever for the solar industry. There was so much extra capacity in the industry in now as a result of a downturn in demand (from cuts to subsidies in markets such as Germany and Spain) and the overbuilding of new production lines (especially in China) that the difference between better and worse cost structures simply didn’t matter very much. A better-cost structure just guaranteed that a company would lose wheelbarrows instead of truckloads of money.
I don’t think this problem ended with 2011. The coming year is likely to be just as bad. But the Jubak Picks 50 is a long-term portfolio. The survivors of this solar winter will do well from the long-term growth in the solar industry. I just don’t expect to see that growth kick in during 2012. There’s no need to stock up on any solar stock even at current terribly depressed price levels. For more on the timing of any solar recovery and when to invest see my November 15 post http://jubakpicks.com/2011/11/15/what-solar-companies-will-survive-the-solar-winter-to-profit-from-the-solar-spring-and-when-do-you-want-to-own-them/ )
Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , may or may not now own positions in any stock mentioned in this post. The fund did own shares of Yingli Green Energy as of the end of September. For a full list of the stocks in the fund as of the end of September see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/
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