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What happened
Shares of yieldco TerraForm Power Inc (TERP) fell 10.8% in October, according to data provided by S&P Global Market Intelligence, as investors became more cautious about the company's recovery.
So what
Moves in TerraForm Power's stock are driven more by speculation of someone buying a controlling stake in the company than by financial performance. And that's in large part because we haven't gotten a financial report for over a year now.
What caused the stock to fall last month was that D.E. Shaw put a bid in to buy the controlling stake in TerraForm Power from SunEdison, but didn't appear to get very far. Debt holders want more money than bidders are currently willing to pay, and that may lead to SunEdison restructuring around TerraForm Power as the main asset.
Now what
Until TerraForm Power's capital structure is determined, investors are going to be playing a guessing game about what the company will be worth. Right now, the incentives of the SunEdison debt holders who control the sponsor's capital structure are working against public shareholders, who want to see SunEdison pushed out of the picture.
I would expect the uncertainty to continue, and it's hard to judge the underlying value of TerraForm Power without up-to-date financial statements. The uncertainty alone would keep me out of the stock right now.
