Today we will take a look at the second stock I promised called BioFuels (BIOF). This is a fairly new company that built and operates two new corn ethanol plants in the Midwest. I started a position back in September.
There are 25.2 millions shares outstanding on this one. That’s an increase of about 10 millions shares since a year ago. The largest two shareholders own over 13M shares combined and both of them are Hedge Funds.
The stock was beaten down badly during the recent market melt-down. Like many others in the sector, bankruptcy seemed imminent for several months.
More recently the company stated they have reached an agreement with their lenders and near term bankruptcy fears were put to rest.
This is a speculative stock to say the least but I am of the opinion that ethanol stocks will soon again be the darling of Wall Street. I say this because I expected the price of oil to stabilize at $70-80 short-term and be higher by Spring.
Hedge Funds usually scare the bejesus out of me and I turn and run for the hills. This stock is different in that David Einhorn from *Greenlight Capital is on the Board of Directors of BIOF. Interesting. Looks good to me near the 50-day MA.
The price of oil will drop this week to the 50-day MA. That’s good for the economy and for frugal traders who want to scoop up some sector shares that are on sale.
*Greenlight Capital is a Hedge Fund managed by David Einhorn.
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