Archive for the ‘PEIX’ category

Pacific Ethanol (PEIX) Blows It Out

Download PDF

My first public note was on PEIX – you can read it here. Following their blow-out earnings last night (which I fully expected as detailed in the model you can find in that note), the stock has shot up from sub-$4 to over $12, a multi-bagger in just 8 weeks. So today I received a question about what to do with the stock at these levels. My response is simple:

Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the sitting.

– Jesse Livermore

Put a X% trailing stop loss and let it ride (where X is equal to your drawdown tolerance).

Pacific Ethanol (PEIX)

Download PDF

Pacific Ethanol (PEIX)
Stock Price: $3.93
Diluted Shares: 16MM (includes effects for post quarter convertible conversion; there are 8MM warrants outstanding at an avg exercise of approx. $7; currently non-dilutive)
Market Cap: $63MM
Working Capital Surplus: $44.2MM
Debt: $107MM (due June 30, 2016)
EV: $126MM

*Note: this write-up was done on 20-Dec-13.

Why would anyone want to invest in a once-bankrupt, cyclical and hated business like ethanol production with a stock chart that looks like the one above?

Because after this year’s bumper crop, corn prices look like this (corn is the biggest input cost for ethanol producers):

1 Year Corn Chart