A hedge-fund manager who is betting against First Solar Inc.’s stock wants his $9 cab fare back after he was invited to a company analyst event then turned away at the door.
Andrew Kaplan said he was barred from entering the meeting in New York on Dec. 16 after receiving an invitation. Kaplan, whose firm Harvest Capital Strategies LLC oversees about $1 billion, said he registered for the event at the Westin New York at Times Square through Sapphire Investor Relations LLC, which represents Tempe, Arizona-based First Solar.“I get my badge, and I’m having a Diet Coke waiting for it to begin and suddenly an IR person comes over and says ‘Sorry, you have to leave,’” Kaplan, who is short First Solar at Harvest Capital in New York, said in an interview today. “It was clearly just a petty thing because the thing was Web cast and there wasn’t a forum for asking questions.”
Companies certainly do not enjoy engaging the short sellers in a discussion in front of other investors. That said, the best way to deal with them is to logically refute their arguments, rather than kick them out of a meeting. I like Kaplan's quote near the end:
“While, I suppose, you have the right to refuse admission to your event to anyone whom you have reason to believe might be disruptive, I find it hard to see how I might fit into that category,” Kaplan wrote in his e-mail to First Solar on Dec. 17. “I was dressed nicely. My hair was combed. I have always conducted myself with decorum at other events, and my questions to management members have always been pertinent and respectful.”
As for why he's short FSLR stock, he is among others worried about the unclear future pricing for First Solar's product. The company's 2010 earnings are expected to come in below this year's, and it's light 3.5% Free Cash Flow Yield would be even lower if they hadn't greatly reduced capital expenditures - possibly to the detriment of future results.