Tristan R. Brown
Alternative energy, long/short equity, commodities, energy

A New Headwind For Pacific Ethanol

Executive summary

Pacific Ethanol returned to profitability in Q2 and experienced improved operating conditions in Q3. The company has also recently taken a number of steps to reduce its feedstock costs and increase its product margins. The market continues to favor Pacific Ethanol's industry peers over the company, however, and a recent leak of proposed regulation from the EPA introduces uncertainty with a bias to the downside to the company's share price.

Introduction

Three months ago I wrote that the stock performance YTD of independent ethanol producer Pacific Ethanol (NASDAQ:PEIX) was an "aberration", especially in light of the performance of its industry peers' shares. The discrepancy between Pacific Ethanol's share price and those of its peers has...

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