Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

Renewable Energy Group / Equity Bottom-Up

<ul>
<li>REGI being bought by CVX for $61.50 per share in cash</li>
<li>We believe the valuation of approximately $3 billion is high enough to deter another bidder from surfacing</li>
<li>At $61.50, REGI’s stock returned 265.4 percent since we initiated coverage on April 24, 2019, and 44.9 percent on a year-to-date basis</li>
</ul>


REGI being bought by CVX for $61.50 per share in cash
We believe the valuation of approximately $3 billion is high enough to deter another bidder from surfacing
At $61.50, REGI’s stock returned 265.4 percent since we initiated coverage on April 24, 2019, and 44.9 percent on a year-to-date basis


Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

<ul>
<li>REGI produces the wrong fuel mix.  REGI primarily sells the less attractive biodiesel (BD), instead of renewable diesel (RD).  Market share is shifting decisively towards RD</li>
<li>Industry RD capacity is slated to grow 5x over the next three years.  REGI will be forced to compete with the oil majors for markets and feedstocks. </li>
<li>REGI is completely dependent on subsidies.  REGI depends completely on incentives and subsidies for its profitability.  And, ultimately, electric and hydrogen win.</li>
</ul>


REGI produces the wrong fuel mix.  REGI primarily sells the less attractive biodiesel (BD), instead of renewable diesel (RD).  Market share is shifting decisively towards RD
Industry RD capacity is slated to grow 5x over the next three years.  REGI will be forced to compete with the oil majors for markets and feedstocks. 
REGI is completely dependent on subsidies.  REGI depends completely on incentives and subsidies for its profitability.  And, ultimately, electric and hydrogen win.


Renewable Energy Group (REGI):  Sell Short

<ul>
<li>This presentation runs through six current short ideas presented on a Smartkarma webinar on 22nd December.</li>
<li>These are:  Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and Renewable Fuels (REGI).</li>
<li>The presentation also summarizes Two Rivers' short idea generation process.</li>
</ul>


This presentation runs through six current short ideas presented on a Smartkarma webinar on 22nd December.
These are:  Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and Renewable Fuels (REGI).
The presentation also summarizes Two Rivers' short idea generation process.


<ul>
<li>REGI is increasing its downstream business through the acquisition of Amber Resources. The commercial distributor gives REGI a foothold within one of REGI’s most important renewable diesel markets, California</li>
<li>REGI’s management has been trying to broaden the Company’s downstream reach to capture more of the margin in selling renewable and biomass-based diesel.</li>
<li>The more than 60 million gallons of diesel sold per year by Amber Resources would fuel a margin expansion opportunity</li>
</ul>


REGI is increasing its downstream business through the acquisition of Amber Resources. The commercial distributor gives REGI a foothold within one of REGI’s most important renewable diesel markets, California
REGI’s management has been trying to broaden the Company’s downstream reach to capture more of the margin in selling renewable and biomass-based diesel.
The more than 60 million gallons of diesel sold per year by Amber Resources would fuel a margin expansion opportunity


<ul type="disc"><li>
Renewable Energy Group (REGI) reported third quarter results supporting our forecast of continued improving margins. The positive traction in margins enables REGI to sustain its capital expansion plans for its Geismar facility without seeking additional outside capital.</li></ul> <ul type="disc"><li>The third quarter included the impact of Hurricane Ida forcing the closure of Geismar for two weeks. The reduced output is expected to have an impact on gallons sold in the fourth quarter.</li></ul> <ul type="disc"><li>REGI’s management is projecting a broader customer base for renewable diesel that could result in wider profit margins in the coming year. The marine industry has turned from its IMO 2020 mandate of reducing sulfur to also consider reducing carbon emissions. The railroad industry is also evaluating using renewable diesel.</li></ul> <ul type="disc"><li>Our expectation for REGI to post adjusted EBITDA of $336.1 million in 2022 compared to $298.4 million in 2021 helps sustain our reasoning of why we continue to believe the shares should be trading above our price target of $100.</li></ul>


Renewable Energy Group (REGI) reported third quarter results supporting our forecast of continued improving margins. The positive traction in margins enables REGI to sustain its capital expansion plans for its Geismar facility without seeking additional outside capital. The third quarter included the impact of Hurricane Ida forcing the closure of Geismar for two weeks. The reduced output is expected to have an impact on gallons sold in the fourth quarter. REGI’s management is projecting a broader customer base for renewable diesel that could result in wider profit margins in the coming year. The marine industry has turned from its IMO 2020 mandate of reducing sulfur to also consider reducing carbon emissions. The railroad industry is also evaluating using renewable diesel. Our expectation for REGI to post adjusted EBITDA of $336.1 million in 2022 compared to $298.4 million in 2021 helps sustain our reasoning of why we continue to believe the shares should be trading above our price target of $100.

United States

Renewable Energy Group Inc. produces biofuels and renewable chemicals. The Company develops, distributes, sells, and provides logistics for biodiesel and renewable chemical production. Renewable Energy Group serves companies throughout the United States.

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Renewable Energy Group (REGI US)

REGI: Buyout! Dropping Coverage

We are dropping coverage after Chevron (CVX) agreed to purchase REGI for $61.50 per share in cash, premium that puts the stock up for the year.

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Current short ideas presented here: Atkore (ATKR), Danaher (DHR), Service Corp International (SCI), ABM Industries (ABM), Monro (MNRO), and...

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REGI: Downstream Acquisition Is Catalyst

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REGI: Carbon Emission Earnings Growth

The quarter was dragged down by a risk management loss that would be nullified in Q4. The HOBO plus RIN margin has been trending higher and should...

BWS Financial Inc

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