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

Renewable Energy Group (REGI):  Sell Short

Founder, BWS Financial Inc

Hamed Khorsand

Founder

Equity Bottom-Up

Renewable Energy Group / Equity Bottom-Up

<ul type="disc"><li>Headline risk to what the new EPA renewable fuel mandate could be for 2020 and 2021 has caused many investors to ignore the basic barometer in the health of Renewable Energy Group (REGI) gross margin.</li></ul> <ul type="disc"><li>The heating oil soybean oil (“HOBO”) spread has narrowed to levels not seen since the beginning of March, which allows for the HOBO plus renewable identification number (“RIN”) to increase to its highest we have seen in many quarters.</li></ul> <ul type="disc"><li>Geismar being offline for approximately two weeks should result in 3.5 million gallons of production being missed. This should mean REGI produces approximately the same gallons as it did in the second quarter.</li></ul> <ul type="disc"><li>We are already the highest earnings and adjusted EBITDA estimates in the consensus and see no reason to lifting our estimates. The wider spreads REGI is experiencing should provide more than ample room for the Company to generate adjusted EBITDA above the current guidance of $70 million to $90 million for the third quarter.</li></ul>

Headline risk to what the new EPA renewable fuel mandate could be for 2020 and 2021 has caused many investors to ignore the basic barometer in the health of Renewable Energy Group (REGI) gross margin. The heating oil soybean oil (“HOBO”) spread has narrowed to levels not seen since the beginning of March, which allows for the HOBO plus renewable identification number (“RIN”) to increase to its highest we have seen in many quarters. Geismar being offline for approximately two weeks should result in 3.5 million gallons of production being missed. This should mean REGI produces approximately the same gallons as it did in the second quarter. We are already the highest earnings and adjusted EBITDA estimates in the consensus and see no reason to lifting our estimates. The wider spreads REGI is experiencing should provide more than ample room for the Company to generate adjusted EBITDA above the current guidance of $70 million to $90 million for the third quarter.

REGI: Widening Margin Fuels Outperformance