Lehman Less Worried About Solar Subsidy Cuts, Recommends Pair Trades in Sector

5/29 - "In contrast to Merrill Lynch’s negative note on solar stocks today, Lehman Brothers analyst Vishal Shah says in his own note today that Germany’s tax burden as a result of subsidies for renewable energy is “not significant,”perhaps a fifth of a Euro per killowat hour per month on every bill, and of Germany’s total renewable energy burden, less than 20% is due to subsidies for solar, in particular...As for politics in Germany, Shah thinks “the probability of a proposal being passed [regarding subsidy reductions] is very low […] as none of the two largest alliances have dominant power in the Parliament."

"But how to trade all that is more complex.

Shah recommends some pair trades, based on which solar manufacturers have exposure to different challenges in different markets. Thing is, for any one stock, you can find issues that don’t affect others, so it’s kind of, pick your flavor."