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Investors Business Daily-IBDs SmarTrend recommended Pacific Ethanol
http://t.co/rCQuzYJR1E
Shares of PEIX Up 49.8% Since Uptrend Call on Shares
Jan 06, 2014 (SmarTrend(R) Spotlight via COMTEX) --
SmarTrend identified an Uptrend for Pacific Ethanol (NASDAQ:PEIX) on November 25th, 2013 at $3.41. In approximately 1 month, Pacific Ethanol has returned 49.78% as of today's recent price of $5.10.
Over the past year, Pacific Ethanol has traded in a range of $2.33 to $7.05 and is now at $5.10, 119% above that low. Over the last five market days, the 200-day moving average (MA) has gone down 0.4% while the 50-day MA has advanced 3.4%.
Pacific Ethanol, Inc. produces and markets low-carbon ethanol. The Company also identifies and develops other renewable fuel technologies, such as cellulose-based ethanol production and bio-diesel.
SmarTrend will continue to scan these moving averages and a number of other proprietary indicators
I antisipate the Golden Cross at the rate of trajectory in a week.
(50) EMA at $4.14 already crossed thrue the (200) MA at $3.98.
http://t.co/r7BkG978YM
The 50 DMA is at $3.85 rising Quik and Will Pass thrue the 200 DMA at $3.98 with in a Week.
http://t.co/FWr6MEsXGr
THE CHART SAYS NEXT LEG UP VERY SOON!
ready to pop
http://y.ahoo.it/PlAGTvUF
IBDs SmarTrend recommended Pacific Ethanol and is Monitoring
http://t.co/6lUSjiJIeG
REALLY CHEAP feedstocks in Q4 According to Neil Koehler
Neil Koehler - We have local corn for almost two months
(so no shipping costs on 2 moths of Q4 2013 Corn)
- PEIX stated that they had positioned to make a t least $3M from corn hedging.
- 15% sugar at majic valley starteded the beginning of nov.
15% sugar to start at Stockton,CA. and Columbia,OR. following Majic Valley in the following 2 months
Hedged corn and 15% sugar to Complete the Quarter
Margins still increasing another 2c per gallon this week
http://t.co/eSNlb61EoC
804,000 Warrants Expire Worthless On January 3rd,Less Dilution
http://t.co/kYKF5b5ASa
804,000,Warrants Expire Worthless,in 2 Days,Less~Dilution Possibility
https://ci4.googleusercontent.com/proxy/tnJGfla9JOuhiOHmr-7vc37TbTM3OqWtBIkNuumB2Fj02pMxdcRb8wXglU1YcT3-dGwr9xUq8lc=s0-d-e1-ft#http://i40.tinypic.com/2iu9mqh.jpg
Yep SUGAR,Pretty Good Though Super
Liking It
Nice Article Out Today On PEIX
http://t.co/mqj7PUn8YH
Pacific Ethanol – Cyclical Turn?
by Lsigurd on December 30, 2013
Over the years I have had pretty good luck catching cyclical businesses at the turn of a cycle. One of my first really successful investment ideas centered around the turn in copper prices in 2003-2004. I ended up with multi-baggers in Aur Resources and Hudbay Minerals. I caught the move in metallurgical coal in 2007-2008 and saw similar results from Western Canadian Coal and Grand Cache Coal. In 2010 I latched on to a turn in the pulp cycle and saw 3-baggers from Tembec and Mercer International. More recently I took advantage of the turn in trucking with a double from Frozen Food Express and of course YRC Worldwide, where I was able to make 6x my money in about 4 months.
So cyclical businesses can pay off big, but you have to time them right and never forget that they are cyclical businesses; what can seem like very easy come can also be just as easily gone. Nevertheless, the upside can be quite large, because most of these businesses are low-margin commodities where relatively modest changes in prices can have a large impact on company margins.
A Turn in the Ethanol Business?
I’m still in the middle of looking at Pacific Ethanol so take what I’m writing here with a grain of salt. There may be elements of the thesis that I am missing. Nevertheless the idea seems promising and it appears, at least so far, to fit with the theme of a cyclical business on the cusp of a turn. I’m throwing this post out now because the stock is moving quite quickly and I am looking for feedback to fill the holes and solidify the idea for me.
I got the idea from an Investorhub poster who goes by the moniker Bobwins. I’ve had a few ideas come by way of this fellow in the past and so I make a point of following his posts on a fairly regular basis. I am also told that a couple of newsletter writers, Keith Schaeffer and Chen Lin, have latched onto the idea.
The Business
Pacific Ethanol produces ethanol from 4 facilities in the Western United States.
http://reminiscensesofastockblogger.files.wordpress.com/2013/12/plants.png
Through a holding company (New PE Holdco) they own 85% of these plants. They have increased their ownership from 20% over the last couple of years, taking advantage of depressed prices given the state of the ethanol market.
In addition to ethanol, each of these plants produces an array of corn based co-products. The company recently began to produce corn oil at two of its plants, which is expected to be a high margin addition to the mix.
The company has 14.7 million shares outstanding which, after another big jump on Friday to $5.30, would put the market capitalization at $78 million. They have about $115 million of long-term debt, making their enterprise value $193 million.
The ethanol market has been depressed over the last couple of years, and this has caused the share price of ethanol companies like Pacific Ethanol to crater. Pacific Ethanol used to be a $20 stock as recently as Q1 2012.
http://reminiscensesofastockblogger.files.wordpress.com/2013/12/stock_price.png
The stock price fell because ethanol margin became non-existent in 2012. This was the result of historically high corn prices and to some extent depressed volumes for ethanol brought on by a still slow economic recovery.
I’ve created the table below from an excellent resource I found via the Iowa State University. The Center for Agricultural and Rural Development (CARD) there compiles historical data on the constituent parts of ethanol operating margins, including corn prices, natural gas prices, and ethanol prices. I have made use of this resource on a few occasions in this post. You can see the trends in margin and input corn cost.
http://reminiscensesofastockblogger.files.wordpress.com/2013/12/margins.png
The dynamic around ethanol margins has changed this year. They have been slowly creeping up, and in November and December they jumped well above $1/gallon. The graph below is again taken from CARD and is basically showing the corn crush spread with the added detail of including natural gas costs to come up with what is essentially a gross margin per gallon.
http://reminiscensesofastockblogger.files.wordpress.com/2013/12/margins_2013.png
What does it mean to Pacific Ethanol?
While its clear that Pacific Ethanol has significant leverage to ethanol margins, what has taken some time for me to figure out is exactly how much the company will benefit from them. I’ve had a heck of a time trying to come up with a forecast for the fourth quarter. While its a pretty simple business model; corn and natural gas inputs and ethanol as the product, there are a few wrinkles that have made it difficult.
First, the corn price that Pacific Ethanol pays isn’t exactly the CBOT exchange price. Pacific Ethanol pays that amount plus a basis plus shipping. Complicating matters, up until the third quarter the company did not break out the corn basis, and they still don’t break out the corn shipping cost. In each case I have been able to back them out using a few assumptions.
The corn basis cost typically run a few cents either way in most quarters, but it rose to $1.60 per bushel in the third quarter because of old crop/new crop dynamics. In the third quarter conference call management said it was averaging between flat to 15 cents in the fourth quarter, so I have used 15 cents. The corn shipping cost seems to run about $1.15/bushel on a fairly consistent basis and management verified a range of $1.00 to $1.30 per bushel on the last conference call.
The second complication comes from third party volumes. Pacific Ethanol produces its own ethanol product, but it also markets third-party product. Its not clear to me how revenues and cost of goods are accounted for with these merchant sales or what the overall margins are. On one hand, in the 10-K it clearly says that merchant sales are considered on a gross basis (page 36). However in the discussion of revenue this is contradicted and that third-party sales are primarily net sales (page 26). I’ve decided to ignore the whole third-party marketing segment entirely and focus only on the internal production of the company. Presumably this segment won’t lose money in a positive operating environment like what is currently upon us.
Third, the company derives some of its production revenue (not to be confused with total revenue, which includes merchant sales) from co-products, wet distillers grains (WDG) dried distillers grains with solubles (DDGS), and recently corn oil. None of these co-products are broken out in revenues, though they are tabulated in each 10-Q as a percentage of delivered corn costs, so one can back them out once some estimate of the total cost of corn is made. I estimate that about 20% of revenue comes from these co-products. Note that there could be some conservatism in my numbers because I am making no extra allowance for the ramp in corn oil production that has been occurring at two of the plants over the last few months.
Finally, the company lumps corn cost, basis cost, corn transportation cost, and natural gas cost together into a single cost of sales item, which provides little transparency on the costs of the constituent parts. As I noted already, I had to use the work of CARD to help me break-out natural gas costs. Consistent with CARD I assumed that natural gas costs would be around 0.1mcf/gallon of ethanol produced.
Below is my own estimate of the company’s quarterly EBITDA from its owned production. This is technically for the fourth quarter, but given the number of assumptions I’ve had to use, I would think of it more as a ballpark-like estimate of how the company’s fortunes change due to the recent increase in margins. In addition to all the above mentioned assumptions I also assumed that SG&A would be consistent with that of the third quarter. The company has over $80 million in net loss carryforwards so I don’t expect taxes to be paid for some time.
http://reminiscensesofastockblogger.files.wordpress.com/2013/12/q4-forecast1.png
Conclusion
If my calculations are in the right ballpark, the company stands to make a significant amount more money from their ethanol production with current conditions. They paid net interest costs of around $3 million per quarter. Depreciation and amortization has typically run at about $3 million per quarter, though this number jumped to $9 million per quarter (gross) in Q3 because of new corn oil processing facilities at two of the plants. Presumably once fully operational the corn oil production units should be able to cover the extra D&A costs. If I assume this is the case in the fourth quarter (and this might be a big assumption since the Stockton plant only became operational in October), then the company’s net earnings from its own production would be around $7 million for the quarter, or a little more than 40c per share.
While, given all the aforementioned assumptions I had to make to get there, I am not super-confident in this number, it remains big enough to warrant a position in the stock. If the company can indeed earn $1+ in 2014, we are probably looking at twice the current sticker price on the stock.
I still have a lot of work to do to understand how the ethanol market works, whether current trends are sustainable and whether there are any details in the company’s filings that I have overlooked. But this story has the smell of something good to me. If I am right, I will continue to add to my position as I gain confidence. I welcome any comments to help my understanding.
1.6M shorts that Came In After R/S~$4.12,Upside Down!
Settlement Date Short Interest
12/13/2013 2,564,282
11/29/2013 2,556,717
11/15/2013 2,474,711
10/31/2013 2,117,972
10/15/2013 2,007,891
9/30/2013 1,892,046
9/13/2013 1,767,035
8/30/2013 1,789,560
8/15/2013 1,480,022
7/31/2013 1,197,865
7/15/2013 1,121,704
6/28/2013 1,056,435
6/14/2013 937,223
http://t.co/jy14KCAuhf
I Don't Believe You,Slanted
ICM/EdiniQ Patent Information for PEIX Corn/OilInstalation
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88528948
Edeniq's patented OilPlus corn oil extraction process
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88529012
Ediniq's patented OilPlus,ICM patented and patent-pending
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=88528600
1.5M Shorts Under Water Since Reverse Split last June
http://t.co/jy14KCAuhf
NOW Above $5,and Institutions Can Freely Buy
http://t.co/yO8irSLNic
Wait for the BOUNCE Like Friday?
Friday Was a $1 Move,Bottom to Top
http://t.co/bKEryhjw8k
ICM/Ediniq Assumed ALL Liability for Pattent Issues
Show Me Pacific Ethanol and ICM/Ediniq Agreement to Prove that Pacific Ethanol Didn't Protect themselves from Your Pattent Troll Scam.
Fact Is You Guys Already Had 18 Pattent Troll Suits at the Time
PEIX Made their Agreement
(That You Do NOT No the Terms Of)
Now PEIX Recognizing Your SCAM and Writing It Into their Agreement with ICM and EdiniQ , Is NOT a Stretch.
You Sighting Another OLDER Case of Some One Not Protecting themselves from Your Pattent Troll Outfit,Does NOT Change the Fact that Later Instalations Wrote It Into Their Agreement.
GERS Will be BK before PEIX Next Earnings.
ICM/Ediniq Assumed ALL Liability from Pattent Troll Outfit,as Part Of PEIX Contract Agreement
These Fraudulant GS Suits Were Known Long Before PEIX Initiated ICM and EdiniQ as Contractors and Liability Buffers.
GERS BK After Trial In March Is Imminent
It's Known GS is a Pattent Troll Co.,Ediniq~ICM~Liability/Agreement
With Pacific Ethanol.
GS alleged suit ICM and EdiniQ Agreement With PEIX,Legal/Liability
You Don't Know PEIXs a Agreement with ICM and EdiniQ
ICM and EdiniQ Most Likely Signed an Agreement to Assume ALL Liability for Any Infringment , Since
Warrants Expire in January and maybe Jan.3
Rule 62 had Mentioned he thought Warrants Expired Jan.3rd 2014
the Share Price would Have to Exede the Warrant Exercise Price,
to Make them Worth Exercising.
If PPS Doesn't Go Above , the Warrants Expire Worthless Creating NO Dilution.
It Would Have to be Well Above $6.27 , to Make It Profitable.
and Once Dillution is Known , it Will Drive Down PPS and they Won't be Able to Sell Above buy Price.
It Would be Easier to buy Shares On the Open Market , Unless PPS was WELL Above $6.27
just how I See It.
Here is the Warrant Dates and Amounts
http://i40.tinypic.com/2iu9mqh.jpg
Some Notables
2.5M Shorts and 1.8M Came After the R/S at $4.12
http://t.co/jy14KCAuhf
Above $5,and Institutions Can Freely Buy
ww2.cfo.com/risk-compliance/2003/12/how-low-is-too-low/
Parabolic Again , and More to GO
http://stockcharts.com/c-sc/sc?s=PEIX&p=D&b=5&g=0&i=p09581719168&r=1388250630163
ethanol margins are at five year highs
http://t.co/huBgzVoJrx
www.allendale-inc.com/wp-content/uploads/2012/10/ethanol%20margin.jpg
Price of Oil Hits $100 a Barrel
http://t.co/zqxba1rxYN
Large Option Trades Yesterday,VERY Bullish
july 7.50 2014 calls and puts
http://stks.co/a02XW
https://twitter.com/WallStJesus/status/416781554581774336/photo/1
the Thing About Trading before Now and After Now
Before You Could See Resistance Point ,See When It's to Low or Seemed Hi,You Knew Where the 200 Dma was Above.
Now It's Uncharted Territorry,I Would Have to Review the Way Back Chart to See Resistance.
There Is This , but I Don't Trust It Much
www.nasdaq.com/symbol/peix/stock-consultant
NASDAQ stock-consultant
It Shows Targets and Resistance , But It Doesn't Know About Inst.Buying,Short Covering and Parabolic SAR.
+ Stocks Can Be Over Bought and Become More Over Bought for a
Long Time.
I Like to Have a Good Idea What can Happen When Trading,and I Don't.
But If I See Something that Makes me Confident it's a 70% Good Trade,I Will Try.
1/3rd of All my Trading money is in this Thing
Dangerous !
but It's So Under Valued , I Don't Feel Scared
It's the Most Over Weight One Stock I Have Ever Been.
Hope Nothing Bad Happens
That Sounds pretty Good
Re loading On Dips Sounds Like a Good Idea
I think Maybe $6s ? On institutional buying and Short Covering.
but I Will Probably be Suprised With Something Else.
I Do like Seeing that Parabolic SAR
Makes me feel like we might be 1/2 way to the Next pull back,as the SAR is Just Starting.
---
My Strategy is Hold 60% till $12
Use the Rest to Sell Rips and Buy Dips.
I Own 27,500 shares.
This Morning Was Amazing ~ Dropped 50 cents and then Went Up $1.
Wish I had Traded It
ID Super,Here Is Something John Templeton Said
The Templeton Growth Fund, launched in 1954
John Templeton
~ “Bull markets are born on pessimism, grown on scepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.”
“Focus on value because most investors focus on outlooks and trends.”
“Sell when you find a much better bargain to replace what you are
selling.”
___
(I Don't Know , and If I Said I Did My Ego Would be to Big)
I Would Not Want to Give You a Wrong Answer,But I Believe these are Good Guidelines from Mr. Templeton.
Keep In Mind , the CEO Doesn't Care About Us.
2.5M Short Shares,1.8M Came After the R/S~33c or below
Over $5,Institutional Buying
Good News !
Q4 Ethanol Margins at a 5 Year High
Ethanol margins highest in five years, in part thanks to DDGS export demand
Meghan Sapp | December 12, 2013
In Illinois, ethanol margins are at five year highs thanks to low corn prices, despite lower demand expected after the EPA revised down the 2013 RFS blending mandate and expectations of a lower blend in 2014. Margins have been boosted by almost $1 a gallon thanks to soaring demand for DDGS exports.
http://t.co/huBgzVoJrx
That's Awesome Sashex
Parabolic,3,500 July $7.50 Calls Bought/at Unchanged and UP
Calls Last Chg Bid Ask Vol
Jul 19, 2014 0.95 0.60 0.90 0.95 3519
HUGE Ethanol Margins http://t.co/eSNlb61EoC
Forming Another Parabolic SAR Move
http://t.co/mF6YVw9sgj
Sidoti Analyst Initiated Coverage 12/17/2013 Neutral/Upgrade?
Higher Price Target ?
Would Not be Suprised ,the Price per Share Is Up $1 Since They Initiated or 20% in 9 Days.
12/17/2013 Sidoti Initiated Coverage Neutral
Ratings Breakdown: 1 Hold Rating(s)
Consensus Rating: Hold (Score: 2.00)
Consensus Price Target: N/A
Parabolic Again,SAR at $3.75 and Turning Up
Same as Parabolic SAR that Started at $2.35 On That Big Move.
http://charts.stocktwits.net/production/original_18459626.png?1388064692
Maybe We See $5.70 in a Week and a Half.
Sash Another Parabolic SAR Forming at $3.80?
There is a lil Upward resistance in the $5.70s
So I'm Thinking It Breaths There , before Continueing Up To $6s.
Which Is GREAT , Keeps the Thought of Those 800,000 Warrants Being Excersized Out of the Picture and They Expire Worthless.
PEIXvsGS Case Transferred&Added to the 20 Other Cases
Litigation Just Became Cheaper Divided by 21 Other DEEP Pocket Deffendants
www.jpml.uscourts.gov/sites/jpml/files/MDL-2181_2013-12-13-Transfer_%20Order.pdf
Date # Docket Text
12/17/2013 29 Case transferred in from District of California Eastern; Case Number 2:13-cv-01042. Original file copy of transfer order and docket sheet received. (Entered: 12/17/2013)
Lawsuit Details
RFC Case Number: P-G13-8018P
Court Case Number: 1:13-cv-08018-LJM-DML
File Date: Tuesday, December 17, 2013
Plaintiff: GS Cleantech Corporation
Plaintiff Counsel: Michael J. Rye, Andrew C. Ryan of Cantor Colburn LLP
Daniel L. Egan, Steven J. Williamson, Megan A. Lewis of Wilke Fleury Hoffelt Gould & Birney LLP
Defendant: Pacific Ethanol, Inc.
Cause: 15:1126 Patent Infringement
Court: Indiana Southern District Court
Judge: Judge Larry J. McKinney
Referred To: Magistrate Judge Debra McVicker Lynch
patent reform legislation,December~Patent Troll Reforms
Earlier this month, the House of Representatives passed the Innovation Act, a patent reform bill designed to target the growing problem of patent trolls.
The Innovation Act included a number of provisions to discourage the aggressive litigation tactics favored by trolls.
"The CBM program provides cost-effective administrative review for the types of poor-quality patents that cover intangible methods of doing business," Schumer said on Tuesday.
www.washingtonpost.com/blogs/the-switch/wp/2013/12/17/senator-says-house-patent-bill-is-treating-the-symptoms-instead-of-the-disease/
Patent Quality Taskforce:Fixing the Problem
uspto:A notice to the public requesting comments on the issue of patent quality
GERS Is Not Going to Pay after March
(Trial is In March)
GERS Will be Dead In April
Maybe Sooner If They Can't Make the Debt till March
Looks Like It's Ripening Now
Good Luck To Us