Solar Spin Offs Soar

The interesting part of watching the increased activity in M&A and IPO in the solar industry is how the valuations of the “parent” companies do once the spin off has occurred.
Global Solar was sold this week by Unisource Energy. Now normally, when one sells off a division that has been bleeding $20M of losses in a few years, we’d expect the market to breathe a sigh of relief and reward such a move with an immediate hike. No such thing happened to UNS. Yet I must express public kudos to Mike Gering (President of GSE) and Jim Pignatelli (Chairman of UNS) for giving Global the opportunity to grow through the sale to European owners. UNS kept some “skin in the game” with the option on shares, hedging a potential upside should the new owners truly make Global Solar shine (and I see no reason why they would not mimic their success in their home country of Germany).
A similar story is set with Cypress and Sunpower. Cypress Semiconductor leveraged the hot market to spin off a huge IPO recently. However the value of the shares it owns in Sunpower is NOT reflected in its own market valuation. Why is that?
ATS Automation, in Canada, is set to do the same thing with its Spheral Solar and Photowatt divisions. Its expected that the spin off could have a market cap in excess of the original parent.
Could it be that the market believes that solar valuations are overpriced today, tredding on emotion, and are set to come back down to earth? Or is it that the market simply doesn’t know how to account for this situation yet, given the embryonic nature of the “solar stocks” and the market’s relative uncomfort at how to value them as part of a “non-solar” entity?
I’m not sure of the answer, but what I do know is that the valuations achieved recently are amazing. When divisions of parents are bought by others at a high price despite losses, you could simply point to a mismatch of corporate cultures and ambition. Why does the new investor stand a chance of making something that was losing money profitable? Perhaps they have a vision and the energy (or stomach) to take something and invest further, where the original owner lost it.
Whatever the answer, (and I invite your comments please), the solar market continues to surprise, although we’ve seen a plateau reached in some stocks and others have simply relaxed their meteoric rise. In either case, we are witnessing an industry which is maturing and coming into its own.