The shares of Sunedison plummeted again today due to report that Dan Loeb, the hedge fund manager of Third Point, exited his position in the company during the third quarter.
David Einhorn, the hedge fund manager of Greenlight Capital, reduced his position in Sunedision to 18.2 million shares.
The stock price of Sunedison was down more than 28% to $3.27 per share at the time of this writing around 2:25 in the afternoon in New York. Sunedison already lost more than 83% of stock value year-to-date.
Carlson Capital's Black Diamond Arbitrage Partners fund added 1.3% net fees in the first quarter of 2021, according to a copy of the firm's March 2021 investor update, which ValueWalk has been able to review. Q1 2021 hedge fund letters, conferences and more At the end of the quarter, merger arbitrage investments represented 89% of Read More
Investors had been concern that Sunedison will not become profitable because it is highly dependent on its yieldcos, TerraForm Power and TerraForm Global. Both yieldcos also lost more than 55% and 50% of stock value, respectively year-to-date. They are also concerned that Sunedison has a huge debt.
Additionally, Sunedison’s third quarter financial results disappointed investors. It recorded a loss of $0.91 per share compared with the $0.70 loss per share expected by analysts.
Sunedison reclassified debt to “recourse”
Sunedison appeared to have changed the classification of its $739 million debt from “non-recourse” to “recourse,” which means lenders will now be able to access more of the company’s collateral, according to a report from TheStreet based on the observations of analysts at CreditSight.
TheStreet issued a Sell recommendation on the shares of Sunedison due to weakness in multiple areas including high debt management risk, disappointing historical stock performance, and feeble growth in earnings per share.
UBS downgraded rating for TerraForm Power
UBS recently identified Sunedison’s weakness to five key factors lower margins on retained projects than expected, management confidence on the pending VSLR deal, LAP arbitration risk, O&M refunds to TERP on higher than budgeted costs on FirstWind portfolio, and higher 3Q Opex cost trends.
Additionally, the firm downgraded its stock rating for TerraForm Power to Neutral from Buy.
“We see several angles to drive recovery in shares. Most notably, we see any renegotiation of the Vivint terms as a possible approach, following other deals, which have been scuttled recently. Notably, the exchange ratio and shift in the mix (cash, stock, convert proportions). Presumably a greater cash component could compensate for an overall reduction in total consideration. Mgmt remains certain there are no ‘outs’ in deal terms,” wrote UBS analyst Julian Dumoulin-Smith.