I can't reply to private messages. I only have the basic membership Sorry.
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Corn. Wow. eom.
Didn't see this before
"Cummins Inc. announced the development of an E85 optimized engine and powertrain that reduces greenhouse gas emissions (GHG) by as much as 50 to 80 percent when compared with a baseline gasoline-powered medium-duty truck."
"The Cummins ETHOS 2.8L is designed specifically to use E85. To take full advantage of the favorable combustion attributes and potential of E85, the engine operates at diesel-like cylinder pressures and incorporates advanced spark-ignition technology, the company announcement said. It delivers the power (up to 250 horsepower) and peak torque (up to 450 lb-ft) of gasoline and diesel engines nearly twice its 2.8-liter displacement."
Here's the rest of the article
PEIX brought Argentine milo into Stockton (which is on a deep water port) last year when there was a significant price advantage in doing so, and no conversion was required. Same with running the sugar in Boardman and Magic Valley (no conversion required). As for the Boardman plant, it is accessible by barge transport, but not directly by deep water vessels. There's a couple damns on the river that are in the way. Shallow draft vessels can navigate through locks but not deep draft.
Right now in ethanol related I'm seeing
CBOT corn up 0.04 (divide that by 2.74 = up equivalent of $0.015/gal)
CBOT ethanol up 0.046
REX up 2.68%
GPRE up 2.45%
CORN (eft) up 1.30%
FUE (eft) even 0.00%
AMTX is taking it on the chin (down 11.21%)
You get the feeling that once it breaks through $18 that it's going to rip?
Update on the Q3 numbers (4 weeks in)
I've updated the source material and added an R to denote which columns are rack prices. Hope that helps with clarity. Still looking to fill in Q1 and early Q2 historical LA terminal prices if anyone has access to them, as well as still looking for a non-subscription alternative to Progressive Fuels as a source for California terminal prices.
Anyway, here it is
There are a fair number of assumptions in the model, including the FVA. Let's see how it holds up come Wednesday.
I'm tracking more data on corn as well as ethanol for Q3, so hopefully that will lead to more accuracy.
I believe the impact from the warrant inducements is pretty straight forward. I think the warrants involved would still be treated as exercised for the purpose of the FVA. The income generated from their exercise would simply be the net value received.
The short answer on how the FVA adjustment works is a conditional yes. There was considerable discussion in the past. I think if you look through my posting history, that will lead you to a good part of the discussion.
We know how much cash was borrowed for the Madera start-up (the gross amount was $7M, I don't remember the net amount after financing charges, but it's stated in the appropriate 8-K. Whether it's treated as a one-time charge is another question. I looked back through the filings when Stockton was re-started and could not find any one-time expense, leading me to believe it was treated as a capital expense.
I've also posted a summary of how I derived an EPS estimate for Q2 over on the IV board (I can't upload a PDF document on IH). Here's a link to the document. Please remember that this is based on a number of assumptions, and is intended to be a draft model that will be continually adjusted going forward. I have no training or education in accounting or business, nor in any other area that would provide expertise in the material presented in the document. There may very well be errors in how I approached some of the calculations. It is not intended to be a replacement for your own due diligence, nor is it intended to provide investment guidance or advice. The purpose in presenting this material is solely to further discussion and understanding going forward, including my own.
http://premium.investorvillage.com/uploads/82915/files/EPS_estimate_5.pdf
That's correct. It's a restriction on shares, not on warrants. Makes perfect sense.
I understand him moving on. What I shake my head at is the retention bonus, especially given the subsequent developments, including your observation that he probably wasn't a very busy guy.
"Under the terms of the Warrants held by the selling security holder, the selling security holder may not exercise the Warrants to the extent (but only to the extent) that the selling security holder or any of its affiliates would, after such exercise, beneficially own more than 7.50% of our outstanding shares of common stock, or Blocker. The Blocker applicable to the exercise of the Warrants may be raised or lowered at the option of the selling security holder to any percentage not in excess of 9.99%, except that any increase will only be effective upon 61-days’ prior notice to us."
http://ir.stockpr.com/pacificethanol/sec-filings?page=2#document-28164-0001019687-14-002271
As for the 9%, simply factor it in. Bottom line, at this market cap, even with the additional 4M warrants exercised at the current price and added in, the company is seriously undervalued. I fail to see how being vulnerable to a takeover attempt in this price range is in any way a good thing.
I've thought about this a bit, and I think this is out of concern of someone possibly attempting a takeover.
Each party involved with the warrants is limited to holding a maximum 10% of outstanding shares, so they have to sell off anything in excess of that limit as they exercise them. However, even at that, they hold a pretty substantial combined balance of shares. If they were to work with another party interested in a takeover bid that also accumulated a sizable share count, they could hold a fair bit of power.
Correct me if I'm wrong, but the replacement value of the 4 plants is somewhere in the $400 - $500M price range, right?
Now consider that the company has effectively paid down $70M in debt in the past year. In addition they upgraded the Stockton plant, including bringing Edeniq's Cellunator technology and bringing corn oil production online, immediately after accomplishing the same at the Magic Valley plant:
http://ir.stockpr.com/pacificethanol/press-releases/detail/137/pacific-ethanol-begins-production-of-corn-oil-at-stockton-plant
and now brought the Madera plant back online. I think that's a pretty strong backwards looking, combined demonstration of the yearly earning power of PEIX.
So, what's the ability to generate $50-$100M in net income a year worth? Combine that with the current market cap, and I think that regardless of exactly how your numbers come out, you have to agree that the current market cap makes PEIX a very attractive takeover target.
That's why I think the changes were made.
So first they paid him a $10,000 retention bonus on June 30th, dangled another $10,000 in front of him if he stayed through to December, and now absorbed his duties with existing staff.
*Shakes head*
ok thanks, was just looking for confirmation it was his paid newsletter, not looking for anyone to copy and paste if it was
I gather this is his paid subscription newsletter? Would like to read his entire comments on PEIX, but can't find them.
Anyone got a ballpark percentage of the amount of production from Magic Valley and Stockton that qualifies for D3 RIN's? Would be nice to add that into the income stream. Should apply to all of Q3 for sure as the decision came out July 2nd. I wonder if it applies to prior production as well. Could well be it applies to each plant going right back to when the EdenIQ technology was up and running.
I know that according to the EdenIQ PR, 13% of the corn kernel is cellulosic fiber that isn't converted in the standard distillation process, but it would be nice to understand what that's actually estimated to translate into in terms of increased ethanol output. Hell even if it was as low as a 1% increase, that would translate into 1M gals eligible for RINs per year.
I know there's a couple posters here who are very familiar with this. Let's come up with some numbers :D
No. Do you? If so I would appreciate the link. I'd be very happy to add another column to my weekly table. In fact I'd be glad to add one for California Corn oil prices too for that matter.
I'm referring to this
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=104513490
I record the daily/weekly prices as appropriate and post that summary every Monday
I work with the weekly grain and ethanol prices as well as the production margins for Iowa and Illinois published by the USDA, the daily rack prices reported by DTN, the daily CBOT corn and ethanol numbers, as well as the daily National Corn Index and the Minneapolis Grain Exchange cash corn prices. I've been getting the daily California Terminal prices from the PFL daily newsletter, but of late their numbers seem to be off for California. Like today, the number they posted for Cal matched the NY harbor late day price (which would of been a drop of almost 20 cents).
Without a reliable Cal Terminal price, I won't be able to continue calculating the estimated PEIX production margin based on their formula.
Edeniq: Customers to Benefit From EPA Ruling on Corn Kernel Fiber
With props to Kel, who worked so hard to keep investors abreast of developments like this
Company’s technology achieves cellulosic ethanol production inside corn ethanol plants
VISALIA, Calif. July 24, 2014 - Edeniq, Inc., a biorefining and cellulosic technology company, applauds the recent U.S. Environmental Protection Agency (“EPA”) publication that corn kernel fiber qualifies as a cellulosic feedstock under the renewable fuel standard (“RFS”) program regulations. This rigorous determination will allow Edeniq’s PATHWAYTM Platform to be used by customers to produce cellulosic ethanol inside corn ethanol plants.
Edeniq’s patented PATHWAY™ Platform combines the CellunatorTM technology with an enzyme cocktail to break down corn kernel fiber, releasing cellulosic sugars into the fermentation process. Corn kernels contain approximately 13% cellulosic fiber that remains unconverted in a typical ethanol plant.
“Cellulosic ethanol produced from corn kernel fiber is one of the fastest and most cost-effective ways to improve the efficiency and sustainability of the ethanol industry in the United States,” said Brian Thome, President and CEO of Edeniq. “We are very pleased with the EPA’s rulemaking on corn kernel fiber and look forward to working with our customers to integrate our PATHWAYTM technology into their facilities.”
Edeniq’s PATHWAYTM Platform includes a technical validation process that will enable customers to quantify the amount of cellulosic ethanol produced within their plants and comply with the registration, recordkeeping, and reporting required by the EPA to generate cellulosic D3 Renewable Identification Numbers (“RINs”), as defined by the RFS.
“Edeniq has been a trailblazer in the effort to develop the analytical and data reduction protocols that will be necessary to validate cellulosic ethanol production in an operational context,” said Tom Griffin, Chief Technology Officer of Edeniq. “Our effort in this area speaks to our commitment to ensuring that our customers realize the full value of their feedstock resources with our PATHWAYTM Platform.”
Press Release
Why should PEIX care? See Kel's pinned post
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88529012
Also:
Pacific Ethanol to Implement Yield-Enhancing Technology at Its Magic Valley Plant
Pacific Ethanol, Inc. to Implement Yield-Enhancing Technology at Its Stockton Plant
Yup, I already track the rack prices, it's the LA and/or SF terminal prices I'm after
Once again it looks like PFL screwed up on the daily California ethanol prices.
PFL Daily Prices
If anyone has a link to another non-subscription source to the California daily terminal prices, I would really appreciate if you could post it. Even a weekly average price source would help.
Even Motley Fool is on board
"The fast and furious pace of yesterday's news might have pushed these stories off the front page, but their importance going forward shouldn't be overlooked by the investing community. Inovio's clinical breakthrough could drive shares much higher as it continues to develop additional products based on this same technology."
Source
Spot Ethanol Prices Mostly Higher with Supply Draw
"The fact that you have production at high levels and are not building inventory -- that is somewhat supportive," commented Jerrod Kitt, strategist for the Linn Group in Chicago.
rest of the article
Speaking of "The Street" thugs, I used to pay more attention to Tim's board than I do now, but I'm still on the mailing list. How appropriate that this comment should pop up today in the aftermath of AF's attempted thuggery. Tim's discussing a different Street Thug, but the modus operandi remains the same
"Here are some examples from TheStreet.com's Rocco Pendola. When I used to watch CNBC, I noticed he always showed up when there was some controversy about a company. He underscores my research that when a good company is struggling and the stock price has been crushed, the media is usually in hate mode. Doing the opposite of what the media is saying can make you rich."
Street Thugs
Thanks. That means it looks like the production margin hung in @ $1.14 yesterday. Great way to start week 4 of Q3. So far that looks like it'll at least match that again today.
MGEX corn was 18 cents lower than CBOT yesterday ($3.46), and the NCI was almost a full 20 cents lower ($3.4432).
Anyone have the California Terminal price for ethanol today? PFL clearly screwed up in their daily report and reported the CBOT numbers as the Cal numbers.
Thanks in advance if you can post them
Probably had a lot to do with what caused the response to the Q1 earnings. Remember that the underwriters/purchasers of the April 2nd offering got to see the books, so they knew full well what was coming and you can bet they knew only too well that the pack generally tends to only look at the EPS and not much else. 1.75M shares to sell calls against (they couldn't possibly get hurt) and almost a month to short on top of that before earning release.
This time around though the situation is a little bit different. They don't have a massive non-cash charge to drum up FUD around and lead a downhill charge.
BTW, do you find it strange how quiet that same trio that took up the offering - Craig-Hallum, Lazard, and Cowen and Company - are on the subject of earnings estimates? Do you think they just might be peddling puts this time around?
There's nothing in the published short interest numbers to suggest there's any validity to that claim. It actually dropped at last count. If they have any updated numbers to prove their claim they should publish them, otherwise it's just an attempt at a hatchet job by shorts attempting to cover.
short interest numbers
How convenient that the July 15th short interest numbers don't come out until the 24th.
I don't know, when I look back over the past year at the short interest numbers, I see a steady rise from 1.12M in July 2013 to 2.53M on Dec 31st. It more or less plateaued in that range until April when the number jumped to 3.1M due to the FVA kerfuffle, corresponding with the drop in share price. Since them it has fluctuated between 2.63 and 3.15M before dropping down below 3M again as of the last report.
Past year short interest numbers
Meanwhile, the outstanding share count has increased significantly, from 16.1M on Dec 31st to just under an estimated 21M as of June 30th.
I haven't observed any blatant attempts by the short side to manipulate the share price on an ongoing basis, beyond the sharp drop in response to the earnings kerfuffle. When I say that, I'm stating it relative to stocks like VHC, where the manipulation is rampant. That makes me question what the nature of the short thesis might be. I would also raise the question as to what portion of the short side might be retail players, as opposed to institutional.
I think we've all seen instances where the retail shareholder crowd has hung in when common sense says to sell, only to ride what was a sizable profit to the point of being deeply underwater, and even then, watched them cling to the long thesis, almost in a state of disbelief that anyone else could see anything other than what they see. I'm not going to discuss that any further, except to say, why would I expect the mindset of retail shorts to be any different?
What might their thesis be?
That the warrants will surely dilute the share value by 40% or better?
That corn will never stay low long enough for a company like PEIX to turn around?
That PEIX will never overcome their debt load?
Let's go back to that long scenario again - the long, desperately under water, clinging to the hope that he is ultimately right. Despite reverse splits, massive dilution, increasing debt load and a never-ending stream of warrant issues, he clings to a losing proposition, hoping against hope that if he just waits long enough, one day he'll break even again.
Why would the short retail crowd behave any differently? 2.5M shorts have been hanging in there since December, clearly under water, in the face of PEIX paying off that massive debt, in the face of an improving share price despite the warrant dilution, in the face of corn prices that show little hope of any meaningful recovery in the foreseeable future.
I believe the term is bagholder. That's not a term strictly reserved for longs. Afraid to close out their position should the highly unlikely occur and PEIX collapse overnight. Hoping this quarter, despite all the evidence to the contrary, will be another losing one and they can reclaim at least part of their losses (not that they will, or they already would of in April).
It's a tough lesson. It's a tough place to be. One way or another, whether short or long, I think we've all had to learn the lesson. For their sakes I hope they learn it before the share price hits the $20's.
I'm not much of one for predictions because so much can change over the balance of the quarter, however, 3 weeks into Q3 the production numbers are shaping up fairly nicely so far.
Assuming 50M gallons of production for the quarter, based on the average price per gallon to date the gross sales on PEIX plant production (including co-products) extends out at $156M.
Assuming a corn basis of $1.28, the PEIX Q3 production margin (price of ethanol - (Price of corn - 30%)/2.74) extends out at $52.5M
Keep in mind the production margin does not take additional costs (nat. gas, yeast, chemicals, etc.) into account. Nor does it include the added savings due to the use of sugar in the Oregon and Idaho plants. In addition, the gross sales only applies to the plant production and does not include 3rd party sales through Kinergy.
I think these numbers are good to keep an eye on over the next couple weeks, as they are indicators of continued strong performance by PEIX at a time where the Q2 numbers will bear out that Q1 was not an aberration.
That's what I thought because that's the date they released the 10-Q. However, they released this on July 24th
Pacific Ethanol, Inc. REPORTS Second Quarter 2013 FINANCIAL RESULTS
I'm thinking Wed July 30th.
I'm liking the op ex action here, today could well be the last buying opportunity in the $17's.
Things just keep chugging along. Some pretty sweet numbers in the weekly state ethanol plant reports.
For example, here's Illinois
http://www.ams.usda.gov/mnreports/gx_gr212.txt
BTW for those who are interested, I continued to refine and tighten up the numbers I have for Q2 and as a result, the EPS estimate that model produces is now $1.60 (it will be interesting to see how that compares).
Well, a fifty cent drop reduces the value of outstanding options expiring tomorrow by about $600K. That's $120K for every 10 cents. They may not have any success trying hold it down, but they'll at least try.
What about in the event of a co-ordinated short attack? There's some big time hurting options sellers out there who don't want to see this in the $18's come tomorrow's close.