Sunedison Inc Tanks On TerraForm Global Inc Premier

Sunedison Inc (SUNE) is sharply lower today, after yieldco TerraForm Global Inc's (GLBL) disappointing premier

Jul 31, 2015 at 2:41 PM
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While many around Wall Street are digesting news that one exclusive fitness firm filed papers to go public, others are keeping a close eye on alternative energy issue TerraForm Global Inc (NASDAQ:GLBL), which began trading on the Nasdaq today below its IPO price. In fact, at last check, the stock was lingering near $14.32, after being initially priced at $15 per share.

One group that's more than likely paying particular attention to GLBL's price action is Sunedison Inc (NYSE:SUNE) shareholders. Specifically, GLBL is SUNE's yieldco, and due to today's disappointing kickoff for the former, shares of the latter are off 8.6% at $23.42.

Longer term, SUNE -- unlike sector peer Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) -- has done well. Year-to-date, the shares have added 20%. Plus, although the equity has sold off sharply since hitting a six-year high of $33.45 on July 20, SUNE appears to have found a foothold near its 50-week moving average.

Should SUNE resume its uptrend, the stock could receive some help from the numerous skeptics lined up against it. In the options pits, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.68 rests in the 64th annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

Echoing this is SUNE's Schaeffer's put/call open interest ratio (SOIR) of 0.69, which rests just 9 percentage points from a 52-week peak. Simply stated, short-term speculators have rarely been as put-skewed toward the security as they are now.

Additionally, short interest accounts for a lofty 30.3% of the stock's available float. At Sunedison Inc's (NYSE:SUNE) average daily pace of trading, it would take almost eight sessions to cover these bearish bets. From a contrarian perspective, there's plenty of ammunition to fuel SUNE's fire, should it resume its quest for multi-year-high territory.
 

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