Daniel Walk
Long only, deep value, research analyst

Renewable Energy Group, Inc.: A Textbook Dollar Bill For Fifty Cents, Maybe Less

Renewable Energy Group, Inc. (NASDAQ: REGI) is the largest producer of biodiesel in the United States. The company's eight production facilities have a combined annual nameplate capacity of 257 million gallons of biodiesel, or approximately 15% of last year's industry production.1 This report will argue that the company's common stock is deeply undervalued, for the following reasons:

  • The company's common stock is selling at a 25% discount to book value and a 12% discount to tangible book value.
  • The company is very likely to continue to grow, even in the most unfavorable circumstances reasonably foreseeable.
  • The nested structure of RIN classes benefits REG, whose D4 RINs can be used to satisfy obligations not only for biomass-based diesel (D4)
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