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Guggenheim ETF Offloads Hanergy In OTC Sale

Guggenheim Solar exchange-traded fund dumped its entire stake in Hanergy Thin Film Power Group, despite the group’s shares not having traded in six weeks.

The formerly high-flying stock has remained frozen out of trading since the company lost $19 billion in market cap on a single day last month.

Hanergy Thin Film

Guggenheim sold in “the best interest of ETF shareholders”

Guggenheim, which operates three exchange traded funds that included HTF, said it had offloaded its stock in Hong Kong though did not give a price. Guggenheim said that the company felt it was wiser to take the price on offer now rather than risk the shares falling further.

HTF’s success in being added to indices including the MSCI China and the FTSE All-World index had bolstered its stock rally by prompting index-followers to buy its shares. It represented 12% of Guggenheim’s solar ETF — the fund’s single-biggest holding.

MAC Solar is the index on which Guggenheim’s ETF is listed. The index provider, MAC Global Solar Energy, had originally said it would boot Hanergy on the day shares resumed trading in Hong Kong. That day hasn’t arrived yet.

A spokesman for Guggenheim said: “Once the underlying index providers decided that it was in the indexes’ best interest to drop Hanergy, Guggenheim did everything it could to seek liquidity for those shares in the best interest of our ETF shareholders.”

Hanergy Thin Film Power’s roller-coaster ride

As detailed by ValueWalk, Hanergy Thin Film Power has been on a roller coaster lately. After soaring over 2000% over the last 3 years and change, HTF collapsed in May when it lost 47% of its value in a single day’s trading.

Matt O’Brien of the Washington Post noted: “It looks like Hanergy might be China’s Enron: an Energy Company of the Future whose stock price could only go up as long as it was borrowing money and could only borrow money as long as its stock price was going up”.

Trading in HTF was halted when the solar equipment maker requested a suspension pending an announcement, which has yet to be made. Interestingly, there is no discernible reason for its sudden collapse.

Hong Kong’s markets watchdog, the Securities and Futures Commission, said it was investigating Hanergy for stock manipulation.

Despite the stock’s suspension, shareholders in HTF are doing an unusually brisk trade via private deals. The trades are mostly brokered by banks that try to match would-be buyers and sellers in the absence of an established market price – a practice that results in deals being made at large discounts. Bankers and investors have reported bids and offers ranging between HK$0.50 and HK$2, representing a discount of up to 87 per cent from the last publicly traded price of HK$3.91.