First Solar Down After Short-Seller Comments

James S. Chanos
Scott J. Ferrell | Congressional Quarterly | Getty Images
James S. Chanos

First Solar shares fell after short-seller James Chanos said insider stock selling and executives leaving the company is "never a good combination."

"You are seeing patterns that short sellers love," the president of Kynokos Associates told CNBC Thursday. "There's been enormous insider selling. The chairman has gotten rid of most of his stock in the last year and a half. And lots of people are leaving."

Shorting is selling assets, usually securities, that have been borrowed from a third party with the intention of buying identical assets back at a later date to return to the lender. Short sellers like Chanos want to profit from a decline in the price of the assets between the sale and the repurchase.

He is short alternative energy in general, he said. Some companies, such as First Solar, have specific issues while others are affected by cuts in solar development subsidies in Germany, Italy and Spain. The Japanese nuclear disaster helped solar stocks a bit, he said, but solar is still a costly way to provide energy compared with natural gas and nuclear power.

"You still need core power plants," he said.

He is also shorting Chinese residential real estate companies because he sees prices dropping in the major cities and building activity declining rather than accelerating.