A couple of our stocks run into some headwind. The main reason is that we operate in the more risky, small-cap sector of the market and when the market sentiment turns, these are stocks that get into the fireline first. This riskiness is mostly a perception, and we think it’s not always warranted.

Apart from that, we can’t detect much company specific reasons for the sell-off other than we have already discussed.

Let’s start with Trina Solar (TSL). Somehow, this sector, and by default TSL, is perceived as risky. We really disagree, but sometimes, when you have a different perception than the market, you get hurt. But how risky is it?

• The main reason for the incredible sell-off seems to be that polysilicon prices are rising. How much does this matter? Not a whole lot. TSL already secured 95% of it’s polysilicon need for this year, so this hardly has an impact. 2009 might be (to some extent, considerable amount of supplies are also secured already) another story, but all over the world (and more especially in China) new polysilicon production capacity is being build. So much so, that the market expects it to become plentiful before the decade is out, causing it’s price to crash, so we hope you can understand us that we have a hard time buying into this argument.
• These rising costs are more than compensated for by efficiency improvements
• It also sold all it’s 2008 output, so where is the risk?
• That risk might be in the dependence of the sector of subsidies (as solar energy cannot yet compete with fossil fuels for electricity generation). However, if anything, the G8 has just stressed it’s renewed focus on alternative energy to combat global warming and the dependence on oil.

It’s difficult to write about a stock were your vision differs substantially from that of the market, but we cannot perceive anything that contradicts our conviction. It might go a little lower still, especially if oil and the general market sell off, but it is already ridiculously cheap.

The chart doesn’t really say a whole lot at this moment:

Bar some major disaster, we cannot imagine it will go below the March lows ($27). There is support at $35, and under normal market circumstances, that should hold. But then again, if you read this space, you know what we think about the market…