Is Green Plains’ (GPRE) Stock a Good Investment Based on Its Potential to Generate Margins
White Brook Capital Partners, an investment management firm, released its fourth-quarter 2023 investor letter. The same can be downloaded here. In 2023, the fund returned 8.38% compared to the Midcap 400 Index’s 16.45% and the S&P 500 Index’s 26.04% returns. The dominance of major tech companies fueled a 26% rise for the S&P 500 in 2023. The market surged in 2023 fueled by a robust economy and AI optimism. In addition, please check the fund’s top five holdings to know its best picks in 2023.
White Brook Capital featured stocks such as Green Plains Inc. (NASDAQ:GPRE) in the fourth quarter 2023 investor letter. Headquartered in Omaha, Nebraska, Green Plains Inc. (NASDAQ:GPRE) is a low-carbon fuels producer that operates through Ethanol Production, Agribusiness and Energy Services, and Partnership segments. On January 26, 2024, Green Plains Inc. (NASDAQ:GPRE) stock closed at $21.61 per share. One-month return of Green Plains Inc. (NASDAQ:GPRE) was -14.31%, and its shares lost 30.40% of their value over the last 52 weeks. Green Plains Inc. (NASDAQ:GPRE) has a market capitalization of $1.388 billion.
White Brook Capital stated the following regarding Green Plains Inc. (NASDAQ:GPRE) in its fourth quarter 2023 investor letter:
"Mosaic (MOS) and Green Plains Inc. (NASDAQ:GPRE), our commodity-sensitive investments, remain substantial positions in the portfolio. The companies are a natural hedge to each other in some ways, as the price of corn is a feedstock for Green Plains while it bolsters the purchasing power of Mosaic’s customers. On the other hand, higher oil prices are a positive for Green Plains, while the opposite is true for Mosaic.
Green Plains is a troubled investment. The stock did not perform as expected in 2023 and has had a difficult start to 2024. The Company continues to be well positioned, generating solid margins on each kernel of corn as the corn crush margin stays meaningfully positive. Furthermore, the industry’s progression is clear. There is an opportunity for ethanol producers to increase short and long term profitability by deriving higher amounts of corn oil, specialty alcohols, and high-density feed protein from each kernel of corn. It’s also increasingly clear that the required capital will prevent many current operators from transitioning. Green Plains was fortunate to begin its conversion relatively early and to have the scale necessary to complete the transition.
During the year, the regulatory environment bent towards ethanol producers as the federal government stopped preventing several midwestern states from blending a higher percentage of ethanol into gasoline and included their substrates in Inflation Reduction Act climate change subsidies…” (Click here to read the full text)
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Green Plains Inc. (NASDAQ:GPRE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Green Plains Inc. (NASDAQ:GPRE) at the end of third quarter which was 18 in the previous quarter.
We discussed Green Plains Inc. (NASDAQ:GPRE) in another article and shared the list of most promising green stocks according to analysts. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
