Ariel Investments, LLC — Ariel Global Composite on First Solar Inc.
Thesis
First Solar fell as higher long-term interest rates undermined renewable-energy valuations and its patent enforcement approach drew scrutiny. Operations remained robust, with widening gross margin, higher earnings and unchanged annual guidance. The order backlog extends through the decade, providing unusually high business visibility. Ariel believes investors are overlooking its rare position as a large-scale U.S. solar module producer benefiting from domestic incentives and strong pricing.
“domestic manufacturing incentives, strong pricing and a highly visible backlog point to earnings power”
Key risks
- Higher long-term interest rates pressure valuations across renewable energy.
- Patent claims are being pursued in federal court rather than through the International Trade Commission, adding uncertainty.
- The investment case relies partly on domestic manufacturing incentives and delivery of the contracted backlog.