When does this whole wind bubble blow over? (AMSC)
I'm calling a top now... or right about now anyway. Some of these stocks are up 500% or more in the past year or two. American Superconductor... a company that purchased a tiny wind firm for under $20 million in stock is now up 700% off its low due to one deal where the buyer appears to not have the financial strength to pay. How does a tiny little $20 million dollar firm turn into somebody filling a $450 million order? They don't. AMSC's core business... superconducting wires, are ridiculously expensive to operate. In summary, this company is a sick joke, yet is has doubled since January alone. The other examples of insane stupidty... I'm looking at you ENER, BWEN, and APWR, are beyond belief. I feel like I'm living in February of 2000 again.
Wind is not ready for the bigtime, it is nice, but it isn't going to make fossil fuels extinct tomorrow. At best, it provides a small change to the overall power grid. By comparison, the internet was far more important than wind will ever be.
I am taking a stand... a mere 53 points down on my AMSC pick, it is time for action. Not only is this company burning money, it is also deceitful, outrageously overvalued, and quite possibly fraudulently lying about its biggest contract as stated by Citron. I've purchased 5 January 2009 puts with a $40 strike price on AMSC for $7.40 ($740 per contract)... when AMSC reaches $20 (or lower) before January of next year, these will be worth between $20 and $25 x 100 shares ($2,000 to $2,500 per contract) netting me roughly a 3 for 1 return on investment. If for some reason AMSC continues its mercurial rally, I will buy more puts at the $45 and then $50 strike price... I've got plenty of capital to build up a diversified put portfolio on these suckers.