Tag - Avr

<strong>Duckwall Alco Stores Inc. </strong>(Nasdaq:<a href="/ticker/duck">DUCK</a>), <strong>Gladstone Commercial 7.75% Pref Shs Series A </strong>(Nasdaq:<a href="/ticker/goodp">GOODP</a>) and <strong>Power Medical Interventions Inc.</strong> (Nasdaq:<a href="/ticker/pmii">PMII</a>) are among the biggest percentage gainers in Friday's trading among companies with market capitalizations under $1 billion.<br /> <br /> Also included among the results: <strong>Aventine Renewable Energy Holdings Inc. </strong>(Nasdaq:AVR), <strong>Apco Argentina Inc. </strong>(Nasdaq:<a href="/ticker/apagf">APAGF</a>), <strong>Micromet Inc. </strong>(Nasdaq:<a href="/ticker/miti">MITI</a>), <strong>Physicians Formula Holdings Inc. (</strong>Nasdaq:<a href="/ticker/face">FACE</a>),<strong> FortuNet Inc. </strong>(Nasdaq:<a href="/ticker/fnet">FNET</a>) and <strong>Delek US Hldg Inc. </strong>(Nasdaq:<a href="/ticker/dk">DK</a>).<br /> <br /> Here are the biggest percentage gainers among small caps:

Aventine Renewable Energy Holdings Inc. (NYSE:AVR) is down 9% today after Lehman Brothers downgraded the alternative fuels company to “underweight” from “equal-weight.” The analyst said that falling corn prices have not improved ethanol production margins. The Pekin, Ill.-based company produces and markets ethanol. Record-high corn prices have cut into its margins and the stock is down 53% since January.

In today’s trading, shares are at $6.02 at 10:30 a.m. ET, down $0.61 from Friday’s close. The stock has ranged from $3.66 to $17.23 during the past year.

Shares of Aventine Renewable Energy Holdings, Inc. (NYSE:AVR) received a bearish shock and fell to a new 52-week low on news before the opening that an analyst has reduced the stock’s price target to $5 per share from $8 per share. The Pekin, Ill.-based ethanol maker will be affected by an increase in the price of corn, according to a research note released by financial services firm UBS.

At 2:46 p.m. ET, the stock had declined $0.38, or 8%, to $4.26. The previous 52-week low of $4.39 per share was established on April 10.

The Russell 2000 (NYSE: IWM) closed in the red while the other major U.S. indices rose on news of a plan to help bond insurers. The small-cap index fell 0.85 points, or 0.12%, to 695.43. The Dow Jones Industrial Average (INDU) gained 96.72 points, or 0.79%, to 12,381.02.

On a year-to-date basis, the Russell 2000 has declined 9.22%, while the Dow is down 6.66% and the S&P 500 has retreated 7.85%.

Bond insurers were the story today, first causing steep declines and then becoming the catalyst of a breathtaking rebound that lifted all but the small-cap index.

Stocks small and large spent the majority of the session deep in negative territory on speculation that rating agencies Moody’s, Standard & Poor’s and Fitch will move to downgrade major bond insurers MBIA Inc. (NYSE: MBI) and Ambac Financial Group, Inc. (NYSE: ABK).

Commodity, low-tech businesses usually lack investment fizz, unless that business is somehow tethered to the Utopian world of alternative energy.

One tethered energy source, ethanol, is responsible for more fizz than any other thanks to politicians left and right, environmentalists and sundry rent seekers chatting it up as the most expedient solution to the putative energy-independence conundrum.

The chat is backed by more than rhetoric: it’s backed by legislative muscle. The Energy Policy Act of 2005 requires that at least 4 billion gallons of ethanol and biodiesel be used in 2006, increasing up to at least 7.5 billion gallons in 2012, with an annual increase of approximately 700 million gallons each year. More recent legislation passed by the Senate (but not the House) amps ethanol usage to 8.5 billion gallons in 2008 and 13 billion gallons in 2012.

What’s more, the legislation is heavily slanted in favor of the home team. Imported ethanol is subject to two duties: (1) a 2.5% ad valorem tax and (2) a tariff of $0.54 a gallon, rendering imports uncompetitive.

Citing the potential boon from more favorable energy-policy iterations, influential Lehman Brothers analyst Mansi Singhal on August 30 scribed a research note upgrading ethanol producers VeraSun Energy Corp. (NYSE: VSE) and Aventine Renewable Energy Holdings Inc. (NYSE: AVR) to "overweight" from "equal weight” while upgrading the entire sector to "positive" from "neutral.”

Other analysts are less sanguine, expressing concern that increased capacity means increased pricing pressure and margin squeezes down the road. On that front, Bank of America analyst Eric Brown recently predicted that the "relentless supply" of new ethanol production will lead to a 70% contraction in margins by 2009.

Even less sanguine are the free-market economists who believe ethanol economics are a fiction. The sector can’t exist at industrial levels without subsidies and tariffs; therefore, it exists at the whim of elected officials.

Political intervention invariably produces unintended consequences, to be sure. Corn prices have nearly doubled this year, soft-drink manufacturers have struggled to buy corn and corn syrup and environmentalists have fretted over new stresses on America’s farmland. All have powerful lobbyists with access to Congress’s ear and could stymie future pro-ethanol legislation.

That said, a complete 180 is unlikely. Alternative energy supporters have the wind at their back. The ethanol market thrives and money is being made, though who will continue to make money as competition, output and unintended consequences multiply is anyone’s guess. For that reason, investors might consider ethanol exposure with less of a California-gold-rush tack and more of an established-diversified-company one.

One company fitting the established-diversified mold is MGP Ingredients (Nasdaq: MGPI), a $225-million market-cap based in Atchison, Kan., that tempers its ethanol exposure with specialty and commodity wheat proteins and starches.

As American consumers continue to feel pain every time they pull up to a gasoline pump, renewable energy remains a popular talking point. The question is when will there be more action than talk, and when will investors in companies making such alternative fuels as ethanol reap a bumper crop of benefits in share price.

Ethanol obviously has grown beyond a fad as an energy source, and Aventine Renewable Energy Holdings Inc. (NYSE: AVR) is one of the biggest producers and marketers in the United States. The company was established in 1981, giving it a marketing strength absent from many of its recently arriving competitors. Little goes to waste at Aventine: while its strength is ethanol, the company also produces and markets biodiesel and such byproducts as corn gluten feed and meal, distillers products, carbon dioxide and brewers’ yeast.  

With plants in its hometown of Pekin, Ill., and another in Aurora, Neb., the company’s annual production capacity is around 207 million gallons. Planning for another plant in Indiana, along the Ohio River, is under way, and will bring the eastern Corn Belt into the company’s domain in late 2008 or early 2009.

Including its marketing alliances, the company marketed and distributed 697 million gallons of ethanol in 2006, or nearly 13% of the total volume sold last year in the United States. Customers include Royal Dutch Shell plc (NYSE: RDS.A), Marathon Oil Corporation’s (NYSE: MRO) Marathon Petroleum, BP plc (NYSE: BP), ConocoPhillips NYSE: COP), Valero Energy Corp. (NYSE: VLO), Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX).

Since its July 2006 initial public stock offering, Aventine Renewable Energy’s shares have fluctuated substantially, following the ebb and flow of negative and positive news reports about alternative fuels. Other than for a few days after its IPO priced at $43, investors haven’t seen the stock trading anywhere near that level, with shares most recently idling in the $13-$16 range. During its first quarter as a public company, Aventine’s board authorized a $50 million share-repurchase plan.