David Tepper’s Appaloosa Management has had a rough six months with its stake in TerraForm Power, but the firm is in the green on the problematic investment now thanks to its parent company’s bankruptcy filing. TerraForm said in a statement on Thursday that SunEdison’s bankruptcy will not have a material impact on its business, and its shares skyrocketed on the news. The stock climbed another 2.77% to $10.75 per share during regular trading hours on Friday. SunEdison shares also climbed on Friday, rising 6.57% to 22 cents per share.
TerraForm Power not planning to file for bankruptcy
TerraForm also said that it doesn’t plan to file for bankruptcy following SunEdison’s filing. Although TerraForm Power is one of SunEdison’s yieldcos, the two companies operate as separate entities, each with their own publicly traded stock ticker. TerraForm also said that after the bankruptcy, SunEdison would keep managing the assets and operations and providing maintenance to TerraForm’s clean energy power plants.
The yieldco also said that it will be able to keep operating and meeting its financial obligations because it will have enough cash to do so. Further, it intends to work with its parent so that operations can continue uninterrupted throughout the bankruptcy process.
David Tepper kept adding to TerraForm position
Forbes contributor GuruFocus notes that David Tepper kept adding to his position in TerraForm as recently as last month, purchasing more than 1.7 million shares at an average of $8.44 each. With Thursday’s gain of more than 6%, Tepper’s investment finally posted returns, climbing by about 24%. The stock’s continued rise today is quickly adding to the returns on that position, which have been a long time coming.
The Appaloosa manager also picked up 7.6 million TerraForm Power shares in the fourth quarter, and although the average price was around $14 per share, the Forbes post notes that he probably picked up those shares in November when the stock dipped below $7 per share. Then in December, the volatile stock rallied to more than $13 per share. As of the end of March, Tepper’s firm held more than 8.7 million shares.