Citron Research Cautious on American Superconductor (AMSC) Citing Possible Undisclosed Related Party Deals

May 13, 2008 10:56 AM EDT

Citron Research has issued a cautious report on American Superconductor (NASDAQ: AMSC) at its website.

Citron questions if the recent top line growth at AMSC, which has boosted the stock significantly over the past week, is legitimate or if it could be related to undisclosed related party transactions.

Citron highlights that small 2007 acquisition ($13M in stock), Windtec, accounted for 52% of AMSC's $74 million total revenue and a majority of their backlog. One company, China-based Sinovel Wind, accounted for approximately 52% of Windtec's revenue for the nine months ended December 31, 2007.

Citron's report notes that in an 8-K filed 3/27/2007 Windtec's (AMSC's growth driver) had inventory of EUR 196,000, but received $100M in orders from Sinovel in 2007.

Citron said, "It is the opinion of Citron that Sinovel is a related party and American Superconductor has not disclosed the true nature of the relationship. This spells big problems for AMSC."

Link to Citron Report

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