Credit: Shutterstock photoT roubled Chinese solar stock Hanergy has been dumped from the flagship solar exchange traded fund. The banged-up stock contributed to a steep fall inGuggenheim Solar ( TAN ), a $332.1 million ETF, in late May. Two other Guggenheim ETFs have also sold off all positions in Hanergy Thin Film Power Group, according to a representative for the company.
"Once the underlying index providers made the decision to drop Hanergy, Guggenheim tried to assist in seeking liquidity for those shares," said spokesperson Ivy McLemore. "We're pleased we were able to find buyers, and we believe we acted in the best interests of ETF shareholders in liquidating all shares of Hanergy from the three ETFs."
Trading in Hanergy Thin Film Power Group was halted after negative reports swirled about the company's business dealings. The stock was TAN's top holding at 12% of the ETF's assets prior to the trading halt. On May 21, TAN's index provider MAC Solar announced plans to drop Hanergy once the stock resumed trading. The underlying-index provider forGuggenheim China Technology ( CQQQ ) andGuggenheim China All-Cap ( YAO ) also decided to remove Hanergy as its price plummeted in June.
Guggenheim was able to go to the Hong Kong exchange and find interested buyers for the outstanding shares in an over-the-counter deal, McLemore said. "The last transaction was consummated today," he added. "We felt it was prudent to get some value for the shares, not knowing what the value would be going forward."
Exiting a position in a stock that's stopped trading can be tricky.
Market Vectors Solar Energy ( KWT ) allocates more than 2% of $22.35 million in assets to Hanergy. Other ETFs tracking indexes from mainstream providers also offer exposure to the stock. Keeping track of the holdings in an ETF portfolio can be critical to successful investing .
TAN, a best-performing ETF in 2015 before Hanergy's woes unfurled, gained 0.2% on the stock market today . It is 21% off its April 23 high of 50. It's trading below its 200-day line, a bearish sign.
Follow Aparna Narayanan on Twitter: @IBD_ANarayanan .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
