I can't reply to private messages. I only have the basic membership Sorry.
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Nice find Mike! This could be what we've all been waiting for.
But they are free to sell at a higher price. The point being, unlike a standard offering, in this case the underwriter bought the shares outright, so $16 won't necessarily present a barrier with the underwriter selling :)
The way I read the agreement, they were guaranteed a 90 day window from April 3 in which there would be no additional dilution (unless they consented to it). While they set an initial price of $16.00, they are free to sell whenever they deem in their own judgement to be advisable, and at whatever price they choose. They are also free to keep them, and were certainly free to short against them as well.
The Company agrees to issue and sell, and the Underwriters agree to purchase from the Company, an aggregate of 1,750,000 Shares. The purchase price per Share to be paid by the Underwriters to the Company for the Shares will be $15.04 per Share (the “Purchase Price”). The Company has been advised by you that you propose to make a public offering of the Shares (the “Offering”) as soon after this Agreement has become effective as in your judgment is advisable. The Company is further advised by you that the Shares are to be offered to the public initially at $16.00 per Share.
Payment of the Purchase Price for, and delivery of, the Shares shall be made at the time and date of closing and delivery of the documents required to be delivered to the Underwriters pursuant to Sections 4 and 6 hereof, which delivery shall take place at 11:00 A.M., New York time, on April 8, 2014 [ ... ]
That the Company will not, for a period of ninety (90) days from the date of this Agreement (the “Lock-Up Period”), without the prior written consent of the Representatives, directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, other than the Company’s sale of the Shares hereunder and the issuance of restricted Common Stock or options to acquire Common Stock pursuant to the Company’s employee benefit plans, qualified stock option plans or other employee compensation plans as such plans are in existence on the date hereof and described in the Prospectus and the issuance of Common Stock pursuant to the valid exercises of options, warrants or rights outstanding on the date hereof.
Lin to the underwriting agreement
I believe the FVA is cumulative (as in they keep a running balance for the year from quarter to quarter), but they don't recalculate the warrant FVA on prior quarter exercises. If you look at last year's Level 3 FV balance sheet in the 10-K you'll see it includes an entry for warrants. Then you can go back and look at each individual 10-Q, starting with Q-1. Keep track of whether that changed. If it did change quarter over quarter, was it due to a re-adjustment, or was it due to additional exercises?
I find the easiest way to find something in a filing is to open it in your browser, then used the "find" or "search this page" feature (in this case for the keywords "fair value") and click away until it brings you to the fair value Level 3 balance sheet like the one I posted.
ID, once again I'm not an accountant, but here's my understanding from what I've put together.
(CAUTION: FAIR VALUE DISCUSSION. If this disturbs you, please feel free to ignore the post)
First, be sure to distinguish between the warrant fair value (FV) and the warrant fair value adjustment (FVA). The tables I published showed examples of what the fair value might be, given the price, volatility and market discount stated. If you paid attention, I also cautioned on more than one occasion that FV is not the same as FVA
Did you notice in the March 10Q that the number given for the warrant FVA was $35,633k while the FV was $32,679k, up from $8,215k? Rule # 1 of accounting: things must balance! I know there was talk a while back about adding the tax liability to the FV, to get the FVA but even if you do that, you won't arrive at the correct number. That suggests that's either not full explanation, or else it's not the correct explanation.
Notice the reconciling of changes to the Level 3 fair value inputs in the 10-Q:
It has an opening ($8,215) and closing ($32,679) balance. Note that while it states what the fair value adjustment was, it doesn't lay out that calculation. However, if you rearrange things, you can see where it came from.
For starters, the change in the balance is simply the difference between the opening and closing balance: 8,215 - 32,679 = (24,464)
Now remember that the table gives the value of the warrants at the beginning of the quarter. However, a number warrants were exercised, in addition to a small amount that expires. Note that they were negative values added to the opening balance to arrive at the closing balance. Add those values back into the difference:
(24,463) + (11,377) + (3) = (35,844).
Another way to think of it is to rearrange the balance reconciliation by swapping out values to opposite sides of the equation to arrive at the FVA:
8,215 + 35,844 + (11,377) + (3) = 32,679
becomes
8,215 + (11,377) + (3) + (32,679) = (35,844)
to arrive at the FVA. Note that it's a negative number, just as it's entered in the Consolidated Statement Of operations.
BTW, again pay attention to the fact that the calculation above is only for the Level 3 inputs (in this case, dealing only with warrant fair value). If there are other fair values to reconcile, the number shown in the Consolidated Statements of Operations will not match the Level 3 reconciliation. That or I've made a mistake.
When it comes to learning, there's nothing wrong with making mistakes. It's all part of the learning process. When it comes to trading and investing, we all tend to start with lots of hope, but little knowledge. In other words, we tend to be ignorant in a lot of areas. I've made my share of mistakes. I may well of made mistakes in this post. Over time I've certainly observed that there's never a shortage of people who will tell me when I am. Fortunately, if I am willing to explain how I arrived at a conclusion, occasionally there's someone who will take the time to show me me error by showing me the correct explanation. In all fairness though, how can someone show me my mistakes if I don't offer up an explanation of how I arrived at my conclusions?
There isn't always someone who is willing and/or capable of explaining things just because I have a question. That leaves me with a choice: remain in the dark, or try to figure it out, post my observations, and continue to ask for any additional insight anyone can offer. That again is pretty much what I'm doing with my explanation in this post.
Btw, one trick I use when I'm looking for answers in a document is to search for keywords. Two good keywords that worked in searching for answers to the questions I had about the FVA were "fair value" and "warrants." At first it led to a lot of blank stares, but over time that ignorance has been shifting to understanding.
I don't believe in ignoring things I don't understand. In my experience, ignorance equates to blindness and when it comes to investments, blindness leads to being blindsided. Everything I learn has the potential to contribute to making more informed investment decisions.
Something to take note of from the 10-Q
11. SUBSEQUENT EVENTS.
Warrant Exercises – From April 1, 2014 through May 8, 2014, certain holders exercised warrants on a cash or cashless basis for an aggregate of 145,000 and 493,000 shares of the Company’s common stock, respectively, for aggregate cash payments of $883,000.
It's not too difficult to cross reference the warrants outstanding as of March 31 and April 15th to see which they are. Just something to be aware of when projecting Q2 numbers.
Apology accepted.
ADVFN, as I have put in a considerable amount of time into the tables I've posted, I feel the time invested in making the call should be shouldered by someone other than me. In addition, due to the nature of my current market positions, I would not be willing to commit to diverting my attention from them during the market.
I can understand your apprehension with what might be a lack of familiarity with some of the questions being asked. However, if the questions are submitted in written form, and if he is willing to respond to them in writing, that places the onus of those submitting question to be clear and concise.
As for the questions I have, I previously posted the following to you, which you currently have on your list:
How specifically is the volatility calculated on for each warrant issue and over what period of time, and what are the actual inputs (daily? weekly? quarterly)?
Discount for marketability restrictions: How is this determined and on what factors?
I would like to re-phrase those questions as follows:
1. PEIX identifies Volatility as one of the critical factors that affects the Fair Value of the warrants. How, specifically, is the volatility calculated for each warrant issue? What are the inputs, or failing that, how would one go about estimating volatility for upcoming quarters?
2. Looking back over the Marketability Restrictions Discount over the past 5 quarters, this number has varied significantly for some of the warrant issues. For example, the 09/26/2012 issue varied significant over a 6 month period; from 53.9% (12/2012) to 75.9% (3/2013) to 48.3% (6/2013). How is the Marketability Restrictions Discount determined, and what factors would lead to a significant shift in this number?
Just a follow-up to that post: Those values represent an estimate the Fair Value (FV) of the warrants in those scenarios, given that the inputs, including the interest and marketability restriction discount do not vary significantly from what was inputted (assuming of course, that I've got this part correct). The numbers DO NOT represent the Fair Value Adjustment that would appear in the Consolidated Statements in the 10-Q.
Once again, I am not an account, nor an analyst. I am only sharing the understanding I've put together from digging into this issue.
(Updated)I ran some scenarios of the potential fair value (FV) of the warrants as of June 30th to get an idea what different share price scenarios would look like.
I made the following adjustments to the March 31data:
Time was changed to days from years and adjusted to June 30
The Marketability restriction was reduced by 1.5%
The warrants outstanding adjustments are explained in the image below the first table
In the 10-Q
If you look back over the range of the past year, you can see how the fair value of the warrants has changed over time. BTW don't confuse fair value (FV) with fair value adjustment (FVA). That answer is also in the 10-Q
I added an extra column on the ones below. I also included the paragraph that immediately precedes the table in each 10-Q/10-K
Well, PEIX's best interests should be in line with those of it's shareholders. So, my take on that would be to continue to focus on efficiencies in production, building a healthy cash balance in order to ride out the ups and downs of the industry and be in a position to move on opportunities when the present themselves, and let the share price take care of itself. Present a strong company to the market and the market will respond.
My personal take would be to include two more things on that front: first, drop the dog and pony show. Institutional investors will take notice as they continue to build a solid track record. Second, end the dilution. PEIX is still chained to the perception of it's past performance - and that included massive debt and heavy ongoing dilution. The way to attract strong investors is through strong performance.
/rant
Well, I can plug the numbers into the appropriate calculator here and then apply the marketability discount to the result and match the numbers in the PEIX tables.
(btw that calculator doesn't apply to every warrant issue, as explained in the 10-Q)
Here's what happens when I run two series for the upcoming quarter, after adjusting the time left on the warrant term appropriately (another quarter has passed). I also reduced the discount by 1.5% for Q2 as that seems to be the average drop per quarter, although I suspect the overall number has more to do with ownership restrictions contained in the warrant agreements. I left all other values the same and then adjusted the volatilty, utilzing the warrant series identified in the table. So, it would appear volatility does affect value when the share price is above the exercise price. That's consistent with PEIX's statement in the 10-Q that share price and volatility and price are the two biggest variables.
FV Base is the value before the marketability restriction discount is applied. FV+D is after.
The good news is that it appears that short of a major spike in volatility, even an increase in share price does not necessarily mean an increase in the net FV, due to the reduction in overall warrants outstanding. Getting an actual decent estimate though still depends on that volatility number, at least from what I've been able to discern.
PS: I would caution to anyone reading this that I am not an accountant, financial analyst, or any other kind of expert in this field. What I am sharing are only my findings from digging into FV and FVA implications for the past 2 months.
I will have a couple questions to submit, along the lines of the earlier ones I posted. I'll post them after the close today, or at latest, tomorrow. I will frame them very carefully so it's clear what I'm asking.
It might be an idea to email the questions to him in advance of talking to him on the phone. It gives him some prep time, and the chance to ask someone else if a question is posed that he doesn't have the answer to.
Damn, looks like the powers to be just decided they don't want to see a close above the 50DMA.
BTW, have you read the last prospectus carefully? In particular, the part about restrictions on the number of shares the sellers can ultimately hold (10%)? From what I can gather, part of this sustained pressure is generated by the fact that the warrant holders have to sell what they exercise at a certain point if they want to be able to exercise more in the future.
If I were really ambitious I'd go dig back into all the offerings and see if that restriction applies to all the warrant issues, or just certain ones? If it's just certain ones, maybe they want to sell those off first so they're no longer restricted.
Which is unfortunate, because I can reproduce PEIX's FV numbers on the warrants using an online Binominal calculator with the information in the tables, but I can't reproduce the volatility numbers to input into a Q2 estimate :(
The rest of the variables don't concern me that much. Well that's not entirely true, the marketability restrictions would have an effect if they took a big shift. I haven't finished looking into them either, so I'm not entirely sure what factors generate those numbers either.
Thanks for those early heads up posts about FVA. I can tell you it helped at least one person avoid a disaster :) Been digging in ever since to understand how it will affect this quarter.
Now if I could just grasp how to calculate the volatility. My attempts using online volatility calculators doesn't produce numbers that approximate the ones PEIX published in the 10Q. Any insight?
Informing the public? Of course not. The SEC even has guidelines on how to do that. Informing one shareholder asking questions of information not generally available to the public and could be construed as material? Or in this particular case, informing one shareholder who says he will then post that information on a posting board to another group of shareholders (still giving him an inside advantage until he posts, and even then, involves the release of information that hardly meets acceptable standards)? That's a different kettle of fish.
I think that them answering questions along the lines proposed (which is along the line of how shares are valued through accounting methods) is a good move on their part. But that's hardly material.
Right now about as far ahead as I can see through the haze is the end of the quarter out there on the horizon, with a big question or two still to be answered. For starters, the closing price on June 30th is going to impact the EPS. Without knowing that, it's difficult to even make that estimate. I will say though that personally, I really would like the price to remain in it's current range for another 3 weeks :D
Even without the impact that the warrants will have on earnings until they're gone, the ethanol industry is volatile. I don't think anyone can see a month down the road, let alone 6 months. Just look at what happened in March and early April with the rail logistics. Who knows what the next event will be? Drought? A big move in oil prices? Another sugar auction? A change in State or Federal policy? Or for that matter, a policy decision by China that places a huge demand on world supplies?
I do think that PEIX is on very stable ground. I would not of said that 8 months ago. What I suspected was a large part of their plan to get out from under massive debt was realized, in no small part due to an overall positive shift in the price of corn as well as overall demand. They now have a healthy bank balance, and could even make a timely acquisition if the timing and right deal came together (although I suspect they'll have to wait given the overall state of the industry at the present time).
Beyond that? Dig back a few weeks to see what the so called experts were predicting for corn prices, vs what they are now. Or for that matter, look at the graph of the Iowa ethanol crush margin put out by Allendale that Kel posts every week. The most recent one came out yesterday. Want to try to guess where it'll be a month from now, let alone 6 months? With the numbers I've been compiling every day, I get a pretty good feel for what it will show next week, because it's based on this week's numbers.
And that's about as far as my crystal ball can see.
Don'tcha just love it? :D
I would be somewhat surprised if they released that information prior to making it generally available to the public. I suspect it would be considered material in nature, and a group of posters on a posting board would not be considered the equivalent of a public PR.
I'm not sure of the scope of request you are making from him when you say "GAAT restatement of the company's performance." That seems like a pretty broad question. Further, I'm not an accountant and don't have an accounting background, so if the request is that broad, I don't think I'm the person to write such an information sheet. What I am is someone who is good at researching, problem solving and creative thinking, with a good dose of persistence (aka stubbornness) built in.
BTW, GAAP stands for Generally Accepted Accounting Practice, so it isn't really a re-statement, it's stating performance using an acceptable, mandated standard.
Investopedia explains GAAP
I'm much more interested in understanding a couple specific factors that go into calculating the fair value (FV) of the warrants. Those specifically are:
1. The volatility: What specifically is the volatility calculated on for each warrant issue, over what period of time, and what are the actual inputs (daily? weekly? quarterly)?
From what I've been able to determine, it's NOT based on share price. I suspect it's actually based on warrant value - but if that's the case, how do you incorporate the present value of the warrant to determine the present value of the warrant? Oh, I feel a calculus headache coming on! Actually though, I think I did finally figure how it's derived, I just haven't actually sat down and tested it yet. By testing it, I mean being able to reproduce the same numbers that appear in the table contained in the 10-Q.
2. Discount for marketability restrictions: Again, how is this determined and on what factors?
If he were to explain those, that would be great. Once I know the answer to those, I can perform a reasonably accurate estimate of the FV of the warrants, and I will gladly share how to do that. The balance of calculations to arrive at the final fair value adjustment (FVA) are pretty much straight-forward, other than a couple minor factors that don't change the overall end number enough to spend too much time focusing on. I mean if I can get within 5%, I'd be ecstatic. Even 10% would be reasonable enough.
Overall though, if you are a passive long-term investor (buy and hold), the FVA over the next few quarters until the warrants are pretty much exercised will not matter in the end. No money leaves or comes back to the company, or to shareholders for that matter, that is unless you actually sell. The issue is of more concern to active investors looking to buy and sell options (including on their own shares), those looking to have some insight on buying opportunities, and traders.
Of course, it is not unheard of for longs to also hold trading balance in addition to their long term shares. If I were an individual in that category, I'd be actively looking for answers to questions like this. In my own experience though, few of those answers seem to come from posting boards.
Until I can derive those two factors above, I'm not going to offer up what is still a somewhat flawed calculation to the board. The reason is simple: while I have an understanding of the margin of error in any FVA estimate I were to make now, others won't.
On the other hand, if someone who is also working on those two factors and wants to communicate privately, I would welcome that.
Spot prices updated as of week 22 (May 30)
I've added a few more columns, including actual prices paid (corn) and received (ethanol) in 2 states by ethanol plants. I also added the weekly spot average for Illinois. Over time I hope this provides more insight to the comparison of the spot prices to other sources. When I compile enough data, I will also include the California terminal price.
In additional, I tabulated a table from the PEIX quarterly reports that incorporates price paid and received as compared to CBOT prices for those periods. FYI west coast prices are not included in those tables because PEIX did not include that information in their quarterly or annual reports.
Considering the arrangement PEIX has with their grain suppliers, I guess it shouldn't be too suprising to see that with shipping costs removed, at worst they pay CBOT equivalent, and generally average better than that.
(edit) The last PR release I see on the PEIX website is dated May 22nd. I haven't seen the article you're referring to, however there are news services that issue a PR on their own every time there is an SEC filing. I suspect that's what you saw, not a PR issued by PEIX.
There was an updated prospectus filed this morning (although with a date of May 15th)
http://ir.stockpr.com/pacificethanol/sec-filings/content/0001019687-14-002251/0001019687-14-002251.pdf
It's the update on the preliminary prospectus that was filed on May 9th
http://ir.stockpr.com/pacificethanol/sec-filings/content/0001019687-14-001751/0001019687-14-001751.pdf
It is not announcing any new dilution. Note that the preliminary prospectus stated
"The information in this prospectus is not complete and may be changed. The selling security holders will not sell these securities until after the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted."
The numbers are slightly different, probably reflecting a slight change in the updated accounting of shares
May 9th 1,346,852
May 15th 1,349,526 Shares
The shares outstanding numbers also now include the small secondary that went to the preferred stock holders.
The rack price I quote for California is $2.90
The terminal price quoted by PLF is $2.80/2.82
State Fuel Taxes: 53.89 cents/gal.
That excludes the federal excise tax of an additional 18.4 cents/gal.
Something more to consider:
Rack price for Oregon: 3.08
State Fuel Taxes: 31.07 cents/gal.
Rack price for Washington: 3.415
State Fuel Taxes: 37.5 cents/gal.
http://www.api.org/oil-and-natural-gas-overview/industry-economics/fuel-taxes/gasoline-tax
http://www.dtnprogressivefarmer.com/dtnag/renewable-fuels
I can not provide a meaningful comparison between the historical prices paid and received by PEIX and California terminal prices because I don't have access to historical California terminal prices for ethanol. If you have that information, providing it would certainly be welcome. Meanwhile I will continue to consider the following statements made by PEIX. And again, if you have access to additional statements from PEIX that shed more details on their marketing, they would certainly be welcome.
Pacific Ethanol controls and operates four ethanol biorefineries in the western United States with a combined operating capacity of 200 million gallons per year and markets the production of two other plants in California. Our four plants are strategically located near our fuel and feed customers ...
http://www.pacificethanol.net/products-and-services/fuel
Serving integrated oil companies and gasoline marketers who blend ethanol into gasoline, the Company provides transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington. (Q1 10-Q, pg 18)
Kinergy Marketing is the ethanol sales and distribution arm of Pacific Ethanol. Kinergy has built a strong western United States customer base of major and unbranded oil companies that distribute transportation fuel to retail customers.
http://www.pacificethanol.net/products-and-services/ethanol-sales-and-distribution
Since the demand for ethanol in the western United States exceeds the production capacity of existing ethanol plants in the region, Kinergy also purchases and sells ethanol produced in the Midwest to meet its customers' demand.
http://www.pacificethanol.net/products-and-services/ethanol-sales-and-distribution
Of course PEIX doesn't receive LA pricing for all their sales. In fact until recently, 60% of their own production (now 50%) comes from areas that are geographically distant from LA.
That's without discussing the fact that the total volume of ethanol sold in Q1 was 112.8 million gallons (Q1 10-Q, pg 22). Of that, just going by nameplate capacity they would of only produced approx. 15 million gallons in California (60M/4). The balance (72.8M) is 25M gallons of production from Boardman and Magic Valley (100/4), leaving approx 73 million gallons in 3rd party marketing arrangements as well as 3rd party buys and sells made by Kinergy. Given that we know there are two other plants in the California marketing pool, and given that we know those are the plants they provide marketing for as opposed to the other 3rd party transactions they conduct;
We market all the ethanol produced by four ethanol production facilities located in California, Idaho and Oregon, or the Pacific Ethanol Plants, all the ethanol produced by two other ethanol producers in the Western United States and ethanol purchased from other third party suppliers throughout the United States
if someone wanted to break out the production of the pool partners, we could further break that down to get a better idea of volume produced in California as opposed to out of state. We don't know where the other purchases are made, however, again given that Kinergy operates in 8 states;
Serving integrated oil companies and gasoline marketers who blend ethanol into gasoline, the Company provides transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington. (Q1 10-Q, pg 18)
and given the volume they market beyond their own production, again I would certainly not expect them to receive California pricing for all their transactions. As Kel points out, we really can't know the full extent of purchase and sale prices when it comes to the dealings of Kinergy. However, we do know what the PEIX operating model is for their own plants, including product distribution. That model includes local distribution.
They do state that they received an average price of "$2.70 for the three months ended March 31, 2014" compared to an average CBOT price of "$2.20 for the three months ended March 31, 2014." (Q1 10-Q, pg 22).
They make a number of statements regarding their arrangements for the storage and procurement of corn, as well as distribution of ethanol. In fact, when it comes to their customer base, they state
The majority of our sales are generated from a small number of customers. During 2013 and 2012, three customers accounted for an
aggregate of approximately 52% and 49% of our net sales, respectively. (Q1 10-Q, pg 40).
That's half of their total sales going to 3 different customers. Even if one of them is Chevron, they clearly purchase significantly less than half of Kinergy's total sales. In addition, there's more than enough room to sell to independents in that remaining half of total sales.
Thanks for the link to California corn prices. I'll add that as another column to my table. It would be nice to find a different basis for comparison across states where PEIX has plants, but for now, rack prices at least provides some basis for comparison across the local markets where the PEIX plants are located.
The pool agreement ADVFN_jk1550 posted would at least suggest that would not be the case with those producers who are part of the California pool, but it would probably be the case for 3rd party purchases/sales Kinergy makes outside of those producers in the pool for sure.
At least it turned around the past couple weeks. I guess if we went through the 10Q we could figure out how much volume they handled above and beyond their own production and the producers in the pool (Calgren & AEAFK).
According to these snippets from the 10Q, they definitely market in other places than California, including Washington State:
Serving integrated oil companies and gasoline marketers who blend ethanol into gasoline, the Company provides transportation, storage and delivery of ethanol through third-party service providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington.
The facilities are near their respective fuel and feed customers, offering significant timing, transportation cost and logistical advantages. The Company sells ethanol produced by the Pacific Ethanol Plants (as defined below) and unrelated third parties to gasoline refining and distribution companies
We have extensive customer relationships throughout the Western United States. Our ethanol customers are integrated oil companies and gasoline marketers who blend ethanol into gasoline. We arrange for transportation, storage and delivery of ethanol purchased by our customers through our agreements with third-party service providers in the Western United States, primarily in California, Arizona, Nevada, Utah, Oregon, Colorado, Idaho and Washington.
If you check the sources I provide on the table I've been posting on a weekly basis, you'll see where each data set comes from. I also generally provide the link in each post (although I do forget to from time to time).
Once again, here is the source. And once again, the prices are not the prices PEIX receives. Everyone got that?
http://www.dtnprogressivefarmer.com/dtnag/renewable-fuels;jsessionid=594E1485F22DA4211E27570CE4B74C5D.agfreejvm2
As I've said several times, if someone wants to provide links that will give me the terminal prices across the same locations, I'll gladly welcome it. Otherwise, I'll continue to tabulate the data sources consistently on an equivalent comparison basis as I have been to date. The last thing I'm going to switch to is a mix of different, inconsistent data sets.
I don't know. I do know they are right on the Oregon-Washington border, that the nearest population centre of any size is in Washington state, and that most of the population that lies within a 90 minute travel radius from their plant lies in Washington State. That would hardly account for all their production, but it wouldn't surprise me if they sell at least some product into Washington State.
Travel time to Portland Ore: 2 hours 33 minutes
Travel time to Seattle Wa: 3 hours 58 minutes
Travel time to Spokane Wa: 2 hours 49 minutes
Travel time to Tri-Cities Wa: 53 minutes
Question is, which market or markets do they sell to?
Yes, I know.
I compile the data and post a chart once a week containing weekly average spot prices. For those that follow that information and know how to apply it, it tells a story. For those who don't follow it, my posts don't tell them anything.
Cash spot prices for ethanol yesterday hit 3.41 in Washington, $3.08 in Oregon and $2.90 in California. The national average spot price for corn was $4.429
I'm loving it!
Hey Kel, looks like I nailed it, and was in the range two weeks in a row, calling for 60 cents for week 20 (it was 57 cents), and 70 cents for week 21.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=102301541
Based on what I see from the daily numbers so far, I'm going out on a limb and calling it to hit the 80 cent range for week 22 :D
They stated their intent was to continue to improve operating efficiencies and enhance production through technological advances in the 10-K
I suspect they want to get the permits and regulatory approval in place at Magic Valley before they say they are going ahead in case there are delays or they are refused the permits. Hopefully it's one more surprise announcement to the unaware come the end of Q2
Of course now that we're being referenced by Shrieking Alphie articles, it might be a little harder to keep things on the Q.T.
As an aside, here's something interesting I noticed last night . . . I went to google "Pacific Ethanol" last night on my laptop because I didn't have the home page bookmarked on it. Low and behold, one of the autofill options that popped up as I finished typing was "Pacific Ethanol warrants"
Me thinks a lot of people must be googling that to bring up that particular search phrase as an autofill
I would beg to differ. Houtherman's approach is every bit as valid. The difference is only in the time frame being looked at. I personally believe a wise investor would look to both points being made and take from each depending on their investment objectives. One addresses the shorter term, the other the longer.
BTW as far as I'm concerned, Kel is #1. Kel was here when I first started coming to this board, tirelessly posting one piece of information after the next. To this day, I dare say a lot of investors would be a lot less aware of the opportunities PEIX presents if not for the constant stream of information that Kel contributes to this board on an ongoing, daily basis.
I think this board is richer when everyone focuses on the positives that flow of information brings. To punctuate that point, just let me say that I'm one of the persons who benefitted from the warnings that were posted during Q1 about the upcoming non-cash expense. Had those cautions not been posted, I would not of started looking into the FVA issue and would of taken a bath on calls I held. Thanks to the warnings, I realized a healthy profit on the calls I held, instead of a loss.
History does has a habit of repeating itself.
The opposite is also true. They won't stop to read the headlines, regardless of which direction might happen to push the EPS.
Your perseverance at digging up information is much appreciated Kel.
I don't twitter, but I'd be very interested to hear how they think prices in Washington and Oregon will affect sales from the Boardman plant.
"the moral is headlines move stocks"
Precisely. But what's really funny is the 1st reply to that article, where the poster states that PEIX just sold some more warrants. He clearly didn't get so far as to even read the headlines!
I also suspect there are other goals as they continue to accumulate cash: building a sufficient capital base to weather the ups and downs of the ethanol industry without having to again resort to extortionist financing arrangements, continue to invest in efficiency-enhancing technologies, and ultimately, expansion if and when the right opportunity presents itself.
Yup. Consider this scenario: It's April 1st. The share price bounced off the low of the day ($15.11) and has reversed back up through $16. You intend on buying another 1000 shares (essentially, a $16,000 investment).
All the earnings estimates are very positive. You are unaware of the effect that the FVA will have on the EPS, and subsequently, the share price. You buy.
As opposed to the alternative scenario: You are aware of the potential effect the FVA could have on earnings. You know the number of warrants exercised in Q1 because the numbers for March 31 are all in the 10Q on page F-41. You know the closing price on Q1. You've done enough homework to be able to approximate that the EPS will show a loss. You decide to hold off, and eventually buy @ $11 on May 12th. A savings of $5000
Of course the scenario is derived from hindsight, but nonetheless, it highlights how understanding the upcoming GAAP EPS can prevent being blindsided.
I knew nothing about the potential effect of FVA on EPS, and hence, share price. At present, I now have the basics down on how the FV is calculated, and just need to learn how to derive a couple factors. I've already tested my assumptions on the FVA for the past quarter, and was able to nail the FV for each issue within 1% of the values given in the Q1 10Q. Once I get that last part down, I'll be able to test it going forward into Q2. I know right now I could derive a ballpark, but I want to be able to use all the information at my disposal that I can.
Given how off the analyst estimates for Q1 were, I kind of like the benefit of developing some understanding of how to derive a fairly accurate estimate for Q2. It's taken a lot of work and I still have a bit to figure out, but I think it's going to pay off.
Thanks, I'll try there. I found a good calculator, the question pertains to calculating the volatility. It's different for each warrant issue, and I can't detect how it's derived.
Thanks again.