Cramer on Pacific Ethanol: Can You Say 'Coin Flip'?

Are Jim Cramer's recommendations on Pacific Ethanol (PEIX) as good as tossing a coin?

With Pacific Ethanol posting impressive third-quarter profits the stock rose 5.77% to $18.50 a share. This is just a few days after Jim Cramer stated, "I'd rather have you in Nebraska ethanol." Cramer has been following this company for a while now and it seems as if he should have a firm grasp on it's stock, but in reality he doesn't. So I decided to dig up all of Cramer's recommendations and tips since March on PEIX. Let's see how he did:

I will give you the date when he made his statement, the price of the stock the day he made the statement, the percentage change in the stock the day-after, and the percentage change in stock till his next statement was made.

March 3/3/2006 -- Cramer was bullish on Pacific Ethanol:
3-Mar-06, $19.04
6-Mar-06, $18.95; %Change = -0.5%
15-Mar-06, $18.20; %Change = -4.4%
Bad Recommendation

March 3/15/2006 -- "I think PEIX at $18 with oil at $62 is a mistake. It should be at $23 and I think that is where it's going."...Cramer was bullish on Pacific Ethanol:
15-Mar-06, $18.20
16-Mar-06, $19.14; %Change = +5.2%
4-April-06, $21.82; %Change = +19.9%
Good Recommendation

April 4/4/2006 -- "When is the Street going to create more ethanol plays? I know that we are tired of continuing to go back to the ADM/Pacific Ethanol...I believe that whenever you go for a sector that doesn't have enough merchandise; you can hit a home run. That's where this sector is now."
4-Apr-06, $21.82
5-Apr-06, $25.75; %Change = +18%
Good Recommendation

April 4/5/2006 -- Cramer was bearish on Pacific Ethanol:
5-Apr-06, $25.75
6-Apr-06, $25.85; %Change = +0.4%
13-Apr-06, $29.27; % Change = +13.7%
Bad Recommendation -- rising crude oil prices overshadow Cramer's remark

April 4/13/2006 -- "[Pacific Ethanol] seems to be dominated by the daytraders these days, though I believe we're still in the early stages of the ethanol cycle -- and the stocks in this group could move higher still."
13-Apr-06, $29.27
17-Apr-06, $33.88; % Change = +15.7%
12-May-06, $42.00; % Change = +43.5%
Great Recommendation -- he had a very large influence on PEIX the day after. The main reason though for this tremendous increase was the rise of crude oil prices from mid-April to mid-May.

May 5/12/2006 -- "This is a stock that is up, as of today, 300% in one year.... You, my friend, [are] completely being a hog..." Cramer was bullish on Pacific Ethanol
12-May-06, $42.00
15-May-06, $37.88; % Change = -9.8%
18-May-06, $29.90; % Change = -28.8%
Bad Recommendation -- crude oil prices began to decline as the hype and speculation of the ethanol sector began to deflate.

May 5/18/2006 -- "Today's that day. Archer Daniels (ADM) is getting hit, The Andersons (ANDE) is coming down, and the biggest offender, Pacific Ethanol, no longer has the rosy glow." ... He also said that Pacific Ethanol is too speculative and that he would ring the register on that stock too."
18-May-06, $29.90
19-May-06, $29.57; % Change = -1.1%
24-May-06, $30.23; % Change = +1.1%
Bad Recommendation -- this is the first public article in which Cramer trashes ethanol stocks, but its effect on the market is miniscule.

May 5/24/2006 -- As a defensive move he recommended that listeners "lighten up on holdings of alternative-fuel company Pacific Ethanol"
24-May-06, $30.23
25-May-06, $31.52; % Change = +4.3%
15-Jun-06, $21.53; % Change = -28.8%
His article had no influence on trading the day after, but in the long run he was correct. The large decrease was because of the company's decision to sell 5.5 million shares of stock to a group of institutional investors for $26.38 a share when the real price was at $31.52. Decrease in crude oil prices and deflation in speculation also played a factor, but not Cramer. This was a Good Recommendation nevertheless.

June 6/15/2006 -- "All these stocks -- ADM, The Andersons, even Pacific Ethanol -- they're not bad companies. But they're about to stop being hot for good, and the sell off we've had in these last three weeks does not represent a buying opportunity."
15-Jun-06, $21.53
16-Jun-06, $20.65; % Change = -4.1%
31-Oct-06, $16.75; % Change = -22.2%
Good Recommendation

August 10/31/2006 -- "Pacific Ethanol ...That's a bearish stock. You need to sell Pacific Ethanol nine ways to Sunday."
31-Oct-06, $16.75
1-Nov-06, $16.03; % Change = -4.3%
17-Nov-06, $17.86; % Change = +6.6%
Bad Recommendation -- Pacific Ethanol is showing an uptrend. Cramer did have a large influence though on trading the day after, but dried up quickly.

November 11/17/2006 -- Cramer was bearish on Pacific Ethanol ... "I'd rather have you in Nebraska ethanol," Cramer joked. ... You get out. SellSellSellSellSellSell."
17-Nov-06 $17.86
20-Nov-06 $17.49; % Change = -2.1%
21-Nov-06 $18.50; % Change = +3.6%
Bad Recommendation -- unless you sold on the 20th.

Total Tally:

6 Bad Recommendations, 5 Good Recommendations. Cramer has been pretty inconsistent with his analysis on Pacific Ethanol so make sure your not too influenced by his advice.

Comments

[Lissa Tucker:]

Gates owns a large % of Pacific Ethanol, and he is no idiot.
Internal and external factors combined with short and long-term objectives and compared
against the demand in the marketplace...makes PEIX is well-positioned for
continued upward growth.

2006 Dec 07 08:55 PM

[jbs:]

You have to make your own decisions about your money - end of story. To me, it doesn't matter what Cramer recommends or Gates owns. What matters is the REASON. If I believe in the reason and do more research that supports their hypothesis, then I may come to the same conclusion they have.

As far as Bill Gates... It's fair to say he's in a very different financial position than anyone else reading this article, so the fact that he owns PEIX shouldn't persuade you one way or the other. Now if he has a well documented reason why he owns it, and you believe in that reason then buy all you want, but for heaven's sake don't buy just because he bought it. (and I'm not saying anyone here is foolish enough to do so).

I never buy based on anyone's advice anyway. It's my money. I can't call Cramer and demand a bazillion dollars because he gave a bad recommendation. And although Cramer probably has good intentions, he "recommends" so many stocks and flip flops so much that his advice is generally useless. I've had my share of Cramer-inspired investments, but only a few. And only after I looked at them very closely.

2006 Dec 07 11:05 PM

[Aasojdasd:]

I agree that you have to make your own decisions about your money but in reality several people don't. Those people instead follow credible sources such as Cramer and though he knows a lot, he does not know everything. I woudn't say his advice is useless as it is evident that he has a major influence in the market but it definetely is overhyped.

2006 Dec 09 05:22 PM

[Lissa Tucker:]

First, PEIX is up 91% for the year, and is one of Forbes top pix.
However, investments are for the long-haul, so don't get caught up in the sector's
short-term performance.

Second, one should never base investments on follow-the-leader
tactics alone. Rather, I suggested the wealthy become wealthier for a reason -- they are
skilled at understanding their environment(s) on a short and long-term basis, and therefore
able to deduce key-projections in it with a fair amount of accuracy (as many have evidenced).

Further, in our constantly changing global marketplace, keeping a close eye to environmental factors- (both
internal and external/ remote, industry and operational), as they shape present and future trends is VITAL.

If you MUST research - UBS Global Bank has the most expansive, real-time in town..but throwing
a dart to the wall will produce the same result, or so it is said. Lastly, I'm no physics major, but the Pendulum Theory
states anything too far to the left or right, has a natural tendency to revert back....so, I agree with you Konrad, "over-hyped"
or "under-hyped" is a "deer-in-the-headlight... move..neutral is best. MAKING MONEY SHOULD BE BORING - that
is the first lesson anyone working on Wall Street will learn (or should).

2006 Dec 13 03:50 AM

[CrossProfit:]

Agree with Lissa on this one, well stated. Notice how (today) ESLR has swung too much to the other side of the pendulum…not fundamentally supported.

Disclosure: Consensus of CrossProfit.
www.crossprofit.com

2006 Dec 13 03:51 PM

[Lissa Tucker:]

Thanks CrossProfit. Nice to hear from you again. I did notice ESLR's activity.

2006 Dec 20 03:58 AM

[Lissa Tucker:]

FYI -

"In a note to investors, Brown said federal and state ethanol legislation coming up in the first half of 2007 will support Pacific Ethanol, as well as its competitors. But new regulations in California that change ethanol blending levels will especially help the company, since it will result in a 100-million gallon capacity boost...."

2007 Jan 16 05:27 PM