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Contrarian, deep value, long/short equity, special situations

BioFuel Energy - Day Traders Pushed The Price Above Reasonable Limits

Over the last week, shares of BioFuel Energy (NASDAQ:BIOF) have shot up 45% with the biggest 24% increase seen on Friday. It is very hard to justify such stock fluctuation especially keeping in mind that no news were announced neither on Thursday nor Friday and that daily trading volumes exceed total free float. I decided to take a look at this situation and eventually took a short position.

Completely misleading media coverage

The news that caused the whole frenzy came out on Wednesday morning. Investing media across all channels reported two supposedly 'key events' related to an ongoing reverse merger (since March 2014) JBGL Capital:

    David Einhorn increased his stake in Biofuel Energy from 26.2% to 35.5% -...
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