NEW YORK (AP) -- Shares of the typically lightly traded BioFuel Energy Corp. saw a renewed surge Thursday, nearly a week after hedge fund manager David Einhorn disclosed that he had increased his stake in the small ethanol company.
THE SPARK: Einhorn's Greenlight Capital said in a filing with the Securities and Exchange Commission on Friday that its entities bought 69,382 shares in the last 60 days, raising Einhorn's stake in BioFuel Energy to 36.2 percent.
The Denver company has ethanol-production facilities in Nebraska and Minnesota with a capacity of about 110 million gallons per year. It has been hit this year by higher corn prices due to drought in the Midwest. The company warned this summer that if commodity margins remained narrow for a long time, it could face trouble generating enough cash to service debt and operate its plants.
U.S. ethanol output slipped last week to 816,000 barrels per day, the U.S. Energy Information Administration said. That was down from 829,000 the week earlier, but remained well above the low of 796,000 seen in mid-July. The Midwestern drought has led to higher corn prices, which has reduced profits for ethanol producers.
SHARE ACTION: The filing initially sent the stock up 57 percent. Shares then wobbled, giving up about 12 percent through Wednesday. Traders found renewed interest Thursday, sending the stock up $2.29, or 55 percent, to $6.44 in afternoon trading. Volume was heavy — nearly 1.5 million shares had traded hands with an hour left before the closing bell, compared with a daily average of about 88,000 shares.
In the past year, the shares have fallen from a high of $24.80 in November to a low of $2.07 in July.