willybizzy the LA Times does not seem to agree with you concerning the value of E85 in California, http://www.latimes.com/news/local/la-me-ethanol10jan10,1,1446423.story?ctrack=1&cset=true
. You need to learn about butanol which does not evaporate as easily as either ethanol or gasoline. That is one of the big reasons that BP and DuPont prefer to develop and blend butanol with gasoline and ethanol. Butanol blends will improve La Smog while E85 would make it much worse.
The Univ. of Ill. and others have tried for years to interest ADM in Butanol. Why ADM has ignored them makes no sense to me. Even old fashioned 1916 era ABE fermentation for butanol should be attractive since it was also used to produce acetone for plastic explosives. Acetone can also be used to produce plastic for siding, bottles, etc. Acetone plastic would not be biodegradable, but not all plastic should be biodegradable either.
In California we require 10% Ethanol replacing the much hated MTBE. We are the largest gas guzzling market. They should raise it to 25% which they could easily do with a strong CalEPA which is much more aggresive than the Fed EPA. The only concern comes down to how high the additive percentage can be raised before analysts start to whine. Their main argument will be that its more corrosive. What they should do is make sure E85 pumps become available and make it a tax writeoff to use E85 instead of gas. Then you would see some change in habits and would improve our smog problems.
For real data the Fed EPA just set requirements for the refiners for 2007, so they are locked in on minimum ethanol requirements they must meet. The rest comes down to supply and demand. Seems like refiners with gas prices increasing are more inclined to start producing more which I think will boost demand for ethanol as well. Thus we move with oil and gas. Every dollar rise in oil should produce a $0.03 rise in gas. However, this year the main argument is that since the gas inventories are lower, the gas prices are rising faster than oil thus giving the oil companies a higher profit.
My biggest peeve is that with their record billions in profits what level of investment in alternatives do they make? Their record of helping the environment and society is sub par. Therefore, go alternatives!
One area of concern to me is that someone must want to buy all of the ethanol produced. Major oil companies do not want to give up their market control, or even a small part of it, to ADM. Many of the states require mixing and agent into the gasoline to make it burn cleaner, and that is our market now. If government mandates a percentage of renewable fuels be added to all gasoline, then we would really have something. Until then, enthanol has to become more price competitive in order to gain market share currently occupied by gasoline.
I think all of this will happen, but it will take time. The safest play in bio-fuels has to be ADM, because the company is also a very large producer of food and additives.
I have liked ADM for years now, and continue to do so.
Why I like the stock:
1) From the last 10Q it looks like we were significantly weighted long on our commodities position which is good because corn prices were rallying. More corn processing with a good hedge is money in the bank since it has the highest operating margins for ADM. It looks like we went in the right direction unlike BG.
2) Our location to the corn in respect to the crop report and where the most increases planned. This means that we might get more favorable prices for corn being local.
3) Stock buyback. Our stock was within their buyback range pretty much all quarter. Which is a great deal for us longs for EPS and future dividend increases.
4) Also, according to last 10Q: On November 4, 2004, the Company�s Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to 100,000,000 shares of the Company�s common stock during the period commencing January 1, 2005 and ending December 31, 2009.
Total shares purchased under program = 4,461,509
Total shares remaining that may be purchased under program = 88,718,607
5) We are 20% of the ethanol production in the US and oil prices are above $60 and hit those targets early. Gas prices are particularly strong and seen hitting last years numbers at least.
That's why I'm all in.
It was alot easier to time when it was down for 13 days in a row.....
I will be very careful about flipping, beacuse with ADM rising so constant, it harly will pay and the risks are too high...
But as of late ADM is paying off very well, abot a weeks pay per day... But as ADM gets higher, and after earnings, volatility will strike ADM creating some huge possible gains....
ADM stock will act much different than it has the last hundred years. Look at mining stocks and oil stocks. Look at LMC, now that is volatility...
> You guys are brave. I will admitt that as a percentage of
> my 401K, ADM is well represented. But not at an 84% level.
Well as of today, value wise it's now 86%....
It's my 401K, cuz I work for them turkeys, and my only choices are ADM stock and a bunch of wimpy mutual funds...
ADM will move the most so I try to keep it in the stock when I feel it has the best chance to move up.... When I feel it's going down I transfer it to a mutual fund.... It takes me a minimum of 4 days to sell the stock, transfer it to a mutual fund, and transfer it back. It has warked pretty well, I've done it about 5 times and so far I've only screwed up 4 times. The transfer gives me free shares. First time I got 350 free shares, second time I got 240 free shares, third time 50 shares, fourth time 120 free shares, fifth time I lost 130 shares. Works out to about 630 shares, or almost 24K in free money, or I may retire a year earlier. No worry about taxes, and in about 6 months I got enough equal to 4 years of scratching and saving.
But I work at it HARD every day..... But it's still easier than working at it...