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Oct. 31 (Bloomberg) -- Solar Millennium AG doubled in three trading days in Frankfurt as investors covered bearish bets amid speculation that the developer of solar-thermal power plants may announce good news, an analyst said.
Solar Millennium soared as much as 48 percent today, its biggest intra-day gain since it started trading in July 2005, and was up 25 percent at 2.63 euros as of 3:51 p.m. local time. Even with the gains, the stock has lost 87 percent this year.
“It’s likely a short squeeze as investors speculate that Solar Millennium will announce something positive today before their business year ends, as they have done in the past years,” Sebastian Zank, an analyst at Silvia Quandt Research in London, said by phone. Solar Millennium spokeswoman Susanne Krebs said there are no plans for a company statement today.
Short sellers borrow stocks and sell them in the hope of profiting by repurchasing the securities later at a lower price and returning them to the holder. Short covering occurs when an investor buys a security to close a short position or to return a borrowed security, resulting in a short squeeze when a lack of supply forces up the price.
Solar Millennium said Oct. 27 that talks on selling its U.S. projects to German photovoltaic developer SolarHybrid AG are proceeding “according to plan.” The companies on Oct. 6 signed conditional contracts on the sale of 2.25 gigawatts of U.S. projects with a potential turnover of more than $5 billion from 2013 to 2017. They include Blythe, California, the world’s biggest solar project.
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