Bloomberg News

Q-Cells Has Record Gain as Traders Cover Short Positions

November 07, 2011

(Updates with record weekly gain from first paragraph.)

Nov. 4 (Bloomberg) -- Q-Cells SE, the German cell and module maker that plans to complete Europe’s largest photovoltaic power plant by year-end, had a record weekly gain in Frankfurt as investors covered short positions.

Q-Cells surged 94 percent, the biggest five-day gain since the shares were first sold in October 2005. The stock rose 27 percent today to 1.166 euros as of the close, giving the Thalheim, Germany-based company a market value of 202 million euros ($278 million).

“A strong movement like that looks like it’s a short squeeze,” Erkan Aycicek, an analyst at Landesbank Baden- Wuerttemberg in Stuttgart, said by phone.

About 45 percent of Q-Cells’ outstanding shares have been sold short, down from 55 percent at the end of June, according to figures on Bloomberg compiled by Data Explorers Inc. Short sellers borrow stocks and sell them in the hope of profiting by repurchasing the securities later at a lower price. Short covering occurs when an investor buys a security to close a short position or to return a borrowed security.

The company said last week it may get more time to repay a 202 million euro corporate bond due at the end of February, easing concerns over its cash position.

“Investors who have bet that the lights could go off at Q- Cells in February may now cover their positions,” Aycicek said.

Subsidy Cuts

Along with peers including Solarworld AG and Conergy AG, Q- Cells has struggled this year amid falling demand in Germany, the world’s biggest solar market in 2010. Solar stocks are also under pressure from Chinese manufacturers that have boosted capacity even as international prices slumped.

Q-Cells said yesterday it will finish building by the end of the year a 91-megawatt solar power facility in Germany, which it said would be Europe’s biggest.

“It’s good news as it shows that Q-Cells still has the trust of its customers to realize large-scale projects,” Alla Gorelova, an analyst at Steubing AG in Frankfurt, said by phone.

Q-Cells, which will report earnings next week, may see demand pick up in the fourth quarter, Gorelova said.

“The weather is great so we will see a lot of installations to lock in higher subsidies before they expire by year-end,” she said.

--Editors: Stephen Cunningham, Randall Hackley.

To contact the reporter on this story: Stefan Nicola in Berlin at snicola2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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