BioFuel Energy Corp.(NASDAQ:BIOF) a lightly traded company saw a sudden surge in price and volume, nearly after a week when hedge fund manager David Einhorn disclose his increased stake in the small ethanol company.
The Green light Capital owned by David Einhorn bought 69,382 shares in the last 60 days, raising its stake in BioFuel Energy to 36.2 percent.
With a capacity of about 110 million gallons per year the Denver Company has ethanol-production facilities in Nebraska and Minnesota. It has been hit this year by higher corn prices due to drought in the Midwest. If commodity margins remained narrow for a long time, it could face trouble generating enough cash to service debt and operate its plants the Company warned.
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The U.S. Energy Information Administration said that the U.S. ethanol output slipped last week to 816,000 barrels per day. That was down from 829,000 the week earlier, but remained well above the low of 796,000 seen in mid-July. The reduced profits for ethanol producers were because of the Midwestern drought which has led to higher corn prices.
The stake has sent the stock up 200% in the past few trading sessions. Shares then rolled, giving up about 12 percent through Wednesday. On Thursday, the stock went up by $2.29, or 55 percent, to $6.44 in afternoon trading. Volume was heavy — compared with a daily average of about 88,000 shares it had traded nearly 1.5 million shares with an hour left before the closing bell.