(Article by Becca Lipman. List compiled by Eben Esterhuizen, CFA. Data sourced from Fidelity.)
A renewal of federal tax credit and renewable energy mandates are bringing back to life more than 52 idle Biodiesel plants in the United States. That represents over a quarter of the plants in the industry.
Biofuels boomed in 2005 when it was blended at 5% with diesel fuel sold at pumps in 20 states. "U.S. output expanded eightfold from 2004 to 2008, peaking at 691 million gallons annually," according to LA Times. State incentives including tax credits served as a catalyst for the industry.
Biodiesel output fell 54% after incentive programs and production was scaled back. But production quickly turned back around after Congress restored tax credits in December for one year and the EPA established higher biodiesel blending mandates.
"The industry's trade group, the National Biodiesel Board, last month reported that U.S. production was headed toward a record year after three consecutive months of record output." About half of the U.S biodiesel production is still derived from soy oil.
Yet the future of biodiesel remains uncertain. Many still-idle factories are now for sale, opening the industry's floodgates for opportunities in new management, partnerships, and company takeovers. Challenging questions also remain about the industry's sustainability without federal and state tax incentives. Without them, the cost of biodiesel will likely surge.
For now however, business appears to be booming.
So, which biofuel stocks are expected to see the biggest upside? To investigate, we collected data on institutional money flows, and identified a list of biofuel stocks that have seen significant institutional buying during the current quarter.
Big money managers seem to think the industry's rebound presents an attractive buying opportunity in the stocks mentioned below--do you agree?
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List sorted alphabetically.
1. Amyris Biotechnologies Inc. (AMRS): Amyris, Inc., an integrated renewable products company, offers renewable compounds for a variety of markets. Net institutional purchases in the current quarter at 4.3M shares, which represents about 25.79% of the company's float of 16.67M shares.
2. Atlantic Power Corporation (AT): Atlantic Power Corporation owns interest in various power projects and a transmission line in the United States. Net institutional purchases in the current quarter at 6.1M shares, which represents about 8.88% of the company's float of 68.66M shares.
3. Codexis, Inc. (CDXS): Develops proprietary biocatalysts for pharmaceuticals and biofuels markets. Net institutional purchases in the current quarter at 1.3M shares, which represents about 6.21% of the company's float of 20.92M shares.
4. Cosan Ltd. (CZZ): Engages in the production and sale of sugar and ethanol products. Net institutional purchases in the current quarter at 5.5M shares, which represents about 23.78% of the company's float of 23.13M shares.
5. Green Plains Renewable Energy, Inc. (GPRE): Engages in the production, marketing, and distribution of ethanol and related distillers grains in the United States. Net institutional purchases in the current quarter at 1.4M shares, which represents about 6.78% of the company's float of 20.66M shares.
6. KiOR, Inc. (KIOR): Focuses on operating as a renewable fuels company. Net institutional purchases in the current quarter at 3.4M shares, which represents about 30.99% of the company's float of 10.97M shares.
7. Synthesis Energy Systems, Inc. (SYMX): Operates as a global energy and gasification technology company that provides products and solutions to the energy and chemicals industries. Net institutional purchases in the current quarter at 409.6K shares, which represents about 62.12% of the company's float of 659.40K shares.
8. Syntroleum Corp. (SYNM): Syntroleum Corporation and its subsidiaries engage in the commercialization and licensing of Syntroleum technologies to produce synthetic liquid hydrocarbons. Net institutional purchases in the current quarter at 8.1M shares, which represents about 9.5% of the company's float of 85.28M shares.
9. Solazyme, Inc. (SZYM): Engages in the production of renewable oil. Net institutional purchases in the current quarter at 12.9M shares, which represents about 44.44% of the company's float of 29.03M shares.