“Huge Profits from Polysilicon Shortage”

By Travis Johnson, Stock Gumshoe, October 22, 2007

The following was submitted by loyal Gumshoe reader and Irregular Streetsifter, who has solved and written up a few for us before. Your friendly Gumshoe has done almost no editing, so this is Streetsifter’s work through and through … thanks!

Using their words, a “measly dollar” will buy you the solution to the two matching teasers from Ian Cooper and Christian DeHaemer, co-editors of the Taipan publication Red Zone Profits. But when you examine the details on the order form, you’ll see that after thirty days your one dollar trial subscription will be automatically renewed for $295 for every three months, bringing your annual total to a not-so-measly $1,180 per year. Both teasers promise to reveal a polysilicon manufacturer whose shares, currently selling for less than ten dollars, “will be trading at well over $50 a share” by next spring.

Of course, the Gumshoe can’t say whether the touted profits will ever materialize, but regular readers already know that you’re not going to have to pay even the first dollar to share the solution.

Both teasers (it’s really just one teaser posted by the two editors under their respective signatures) contain the following bullets:

• A company that just booked a $185 million deal to outfit a leading European solar technology company in polysilicon for the next seven years…

• One that’s signed another seven-year deal with a Fortune 500 electronics producer that could bring in $370 million…

• One that has been commissioned by the world’s largest solar module manufacturer for ten years and $678 million…

• One that is looking to bring in about $1.2 billion in the next ten years from polysilicon supply contracts.

With that many clues, the Gumshoe’s Cognolator (on loan to Streetsifter) doesn’t even need to warm up to operating speed before identifying the mystery stock as

Hoku Scientific, Inc. (NASDAQ: HOKU)

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A Hoku press release contains confirmation matching the listed bullets. The seven year $185 million deal is a contract between Hoku Scientific’s subsidiary, Hoku Materials, Inc. and and Global Expertise Wafer Division, a subsidiary of Solar-Fabrik AG. The second seven year deal for $370 million is with SANYO Electric Co, and the $678 million ten year agreement is with Suntech Power Holdings Co., Ltd. The cumulative total of these agreements is $1.2 billion.

Tread cautiously through the polysilicon, however, since Hoku has already announced that second quarter revenue will be below analyst’s estimates, and the company is predicting a net loss of 1 – 1.2 million dollars. And their polysilicon production plant in Pocatello, Idaho is still under construction.

On June 6th of this year, the Gumshoe posted a solution to another Taipan solar energy stock, Sara Nunnally’s Material Profits Wildcatter tease for SOEN, and it certainly hasn’t qualified as a stellar performer. Whether Hoku will live up to the touter’s expectations is a subject for your own due diligence, but the solution comes to the tease – and the retention of your “measly dollar” – comes from your trusty Gumshoe, with thanks to regular contributor Streetsifter.

Now back to the Gumshoe’s words — I couldn’t resist adding a little bit. Solar teasers are thick on the ground, as Streetsifter says, and it’s getting so even your grandmother’s likely to be talking about the polysilicon shortage. It’s arguable whether we’re still in the “sweet spot” for polysilicon, in my personal (and probably flawed) opinion. I own one of the major polysilicon producers, MEMC Electronic Materials, and I’m growing nervous because every single major manufacturer is dramatically ramping up capacity to fuel the solar boom … and lots of little guys like HOKU are coming out of the woodwork with plans for a poly plant and a dream.

That’s not to say this isn’t a great one — but I wouldn’t assume, just because we have current high spot prices for polysilicon, that every chemical or wafer company that tries to exploit those prices is going to be successful. One need only look as far as LDK Solar, an upstart in this area and a favorite of Robert Hsu’s, that fell precipitously because it seems no one is really sure, still, whether they’re stretching the truth about their inventory.

If you’ve got a yen for solar, here are bunch of other solar and wafer teasers we’ve worked out over the past month or so:

SB-1 Energy Dividend
The Biggest Solar Energy Project Ever!
Robert Hsu’s Red Hot Solar Profits

Best to all, and extra thanks to Streetsifter for writing this one up for everyone!

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FYI, Hsu has cut bait with LDK. Among other things, they did not return his phone calls.

Gravity Switch

Thanks fabian, that’s been my experience with Canadian and British stocks and matches my understanding — I don’t think I’ve owned any Australian yielders.

bill carson
bill carson

i work for a solar silicon producer. there is no shortage of polysilicon and will not be for sevaral years.