ENER’s news today regarding production cutbacks following an “abrupt shift in the French and Italian solar incentive structures” calls into serious doubt the company’s ability to continue the recent financial turnaround. And the Market is reacting accordingly. I still believe the company can, in theory, still restructure the convertible debt, but with the lower stock price and tepid end markets, the dilution equation would now be quite onerous for equity shareholders. Obviously my previous post about ENER’s worst case dilution is flat out wrong. This is obviously not a stock I would average down on, as despite the lower stock price, the risks are quite large here.

Well, I needed a nice tax loss and it’s always good to be reminded why diversification is so important when investing in high-risk equities. It’s rare that things work out as planned either on the downside or the upside.