National Pension Service Increases FSLR Stake as DeepValue Report Flags Persistent Risks

What happened

National Pension Service raised its holdings in First Solar by 24.1% in the latest quarter, adding 8,036 shares to own 41,419 shares total, per a recent 13F filing. This move occurs amid a crowded shareholder base that expects high margins driven by IRA Section 45X tax credits, as noted in the DeepValue report. However, the report cautions that FSLR's earnings are inflated by these credits, with significant risks from policy uncertainty, backlog debookings like the BP-related 8.1 GW loss, and margin compression. The purchase is negligible relative to FSLR's 107 million shares outstanding and does not alter the fundamental investment landscape. Investors should interpret this as routine institutional activity rather than a bullish signal, given the underlying vulnerabilities.

Implication

First, this small stake increase reflects continued institutional interest but fails to address the DeepValue report's warning that FSLR trades at a premium multiple with earnings heavily reliant on Section 45X credits. Second, the report identifies key threats, including legislative changes to tax credits, potential further debookings beyond the 8.1 GW already seen, and margin pressure from logistics and mix shifts. Third, FSLR's backlog quality remains a concern, with early stress signals like guidance cuts and downgrades indicating execution challenges. Fourth, the stock's valuation at ~18x earnings lacks a margin of safety if policy or demand weakens, skewing risk-reward negatively. Fifth, investors should heed the report's advice to trim above $270 and await a lower entry point, as this news does not justify a shift in strategy.

Thesis delta

No material shift in the investment thesis is required. The National Pension Service's purchase is a minor, non-impactful event that does not change the underlying risks of policy exposure, backlog instability, and earnings inflation from tax credits. The DeepValue report's 'POTENTIAL SELL' rating, base case of $230, and key monitoring points remain unchanged.