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.

Independent Stock Specific Research

REGI: Widening Margin Fuels Outperformance

Founder, BWS Financial Inc

Hamed Khorsand

Founder

Equity Bottom-Up

Renewable Energy Group / Equity Bottom-Up

<ul type="disc"><li>Focus for the last year and a half had been put on the magnitude of gross margin Renewable Energy Group (REGI) was able to achieve every quarter. In the past couple months, the political environment has intensified with the pending decision from the EPA. Media reports continue to suggest the agency is considering leaving the blend unchanged compared to 2020.</li></ul> <ul type="disc"><li>The political landscape changes the dynamics of the renewable diesel industry back to the state it was in couple of years ago. It could serve as a deterrent for new entrants since EPA mandates have the biggest impact on the industry and profitability.</li></ul> <ul type="disc"><li>The volatility from headlines in June resulted in renewable identification number (“RIN”) prices to adjust lower from their all-time highs. However, the price of soybean oil also declined with fears demand would erode with the new EPA rules.</li></ul> <ul type="disc"><li>This level of volatility has resulted in the heating oil soybean oil (“HOBO”)-RIN margin to widen from the beginning of June. REGI’s third quarter could benefit from wider margins.</li></ul>

Focus for the last year and a half had been put on the magnitude of gross margin Renewable Energy Group (REGI) was able to achieve every quarter. In the past couple months, the political environment has intensified with the pending decision from the EPA. Media reports continue to suggest the agency is considering leaving the blend unchanged compared to 2020. The political landscape changes the dynamics of the renewable diesel industry back to the state it was in couple of years ago. It could serve as a deterrent for new entrants since EPA mandates have the biggest impact on the industry and profitability. The volatility from headlines in June resulted in renewable identification number (“RIN”) prices to adjust lower from their all-time highs. However, the price of soybean oil also declined with fears demand would erode with the new EPA rules. This level of volatility has resulted in the heating oil soybean oil (“HOBO”)-RIN margin to widen from the beginning of June. REGI’s third quarter could benefit from wider margins.

Renewable Energy Group

REGI: Margins from Volatility