REGI: Widening Margin Fuels Outperformance

Fundamental Short Selling Research

Eric Fernandez, CFA

TwoRiversAnalytics

Equity Bottom-Up

Renewable Energy Group / Equity Bottom-Up

<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