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cessna

buying ethanol stock

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Don't know if anyone is interested in buying any stock but you might keep an eye on VSE,GPRE, and USBE. I bought Verasun from $11 to $15 thinking it was a good deal compared to the IPO a little over a year ago of $24 per share. Today it's in the $9's. :'(

Marty

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Sure glad I do not work for a public company that gets forced to show stockholders constant gains in earnings. It is nice to be able to do long term projects that will pay out in the future- that is tough in public companies. I worked 26 years for a cooperative and paricipated in monthly board meetings and annual meetings- even though these are not as brutal as public companies i found that the thinking can become very short term when things get tough and if projects do continue they will get cut so thin that it they are set up to fail from the lack of resources.

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Companies have to choose who to be loyal to when they go public.  It always breaks down to the leadership choosing between being loyal to customers or employees or shareholders.  When most CEOs are paid more in shares than they are in salary you can see that the employees and customers are going to be the losers.

 

Making decisions on the course to take a company based on today's flimsy market woes makes a company's value very hard to understand. Share price motivated leadership has left many retirees left high and dry.  Venture capital seems to be the gateway drug for a lot of these companies.  Venture capital in the last quarter has reduced in many markets by 20-40%, including the ethanol world.  There's something out in the future they don't like. 

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found that the thinking can become very short term when things get tough and if projects do continue they will get cut so thin that it they are set up to fail from the lack of resources.

 

Same happens in govt. It is an endemic problem for humans when you mix people with widely differeing tolerance for risk and future thinking.

 

This is one of the reasons some privately owned companies do very well as long as they are managed by the original owner who has a good strategic vision and patience to do what is necessary to get there in a logical and risk tolerant way.

 

When you get a company run by a board of directors you either have a strong personality that provides that consistancy or you have factions with different risk tolerance and short or long term view of pay back attempting to push the whole company into their mode of behavior. The result is you frequently have one group win one board room battle and the other group wins another board room battle. The result is neither side gets what they need to get to where they want to go.

 

Larry

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Correct me if I'm wrong but does it really matter to Verasun what the stock is worth? They issued X amount of stock at $24 per share to finance their continued expansion in the ethanol industry. They got the money and now the people holding the stock have decided what it is worth by running it up and down. I still feel if VSE goes down the tube then the industry as a whole has big problems ahead and a smaller LLC I am thinking of investing in would be a bigger mistake.

Marty

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Marty- the problem comes when they start to manage short term to bring up stock values or when they want to build something new financed by new stock offerings and no one wants to buy based off of past stock history.

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Keep your eyes on VSE---it's tanking again today. Isn't it interesting how a stock can fluctuate a couple of dollars a share in a couple of weeks when nothing really changed in the business. :o

Marty

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my personal opinion is average down with the solid ethanol companies ..

 

There is a flood of ethanol hitting the market this time of year..that's all it is

 

2 things will happen .. mandated 20% ethanol in at least a few states and a surge in E85 pumps the next few years .

 

 

For short term players ..buy now sell late spring early summer ..play the seasonal cycles of ethanol supply

 

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