Mr. DCC

At $1.90, $ALTO has just barely started trading above the price it was at when Bradley Radoff's group disclosed their activist position back on February 24 ($1.87). The market is contradicting itself here. Back in February: 1. The BBB, which substantially extends 45z credits, had not been passed yet. Also, management hadn't hinted at the possibility of lowering their CI score through EAC's and other initiatives. 2. E15 in California had not been passed. 3. Crush margins were weaker. 4. The benefits of activist involvement, including SG&A cuts, better operational efficiency, and more thoughtful capex, were unknowns and hadn't been realized yet. 5. Related to (4), asset sales weren't being seriously entertained. Now they are. 6. Western assets were still stuck in the mud. Now they're a net positive for the company (environment is so good now that Magic Valley might even be able to restart). 7. There weren't any performance catalysts. Now we're coming off of Q3 results, which were the best $ALTO has had in over 3.5 years. So, in a very real sense, the market hasn't factored in almost anything on this list. We've only returned to the price $ALTO was at when it was still incinerating shareholder equity and the future was unclear. At minimum, $ALTO's tangible book discount (31%) should have closed vs. $GPRE (7%) by now. But it hasn't.

$PBI was trading at $9.10 when Kurt Wolf negotiated his incentive structure. Instead of opting for $3m of shares, he asked for $3m of options with an average strike of $14. This is a bad trade unless he believes the stock is going higher than $23.10. $PBI's convertible note strategy included capped calls that prevent dilution up to a share price of $22.36, which was a 100% premium to the share price at the time ($11.18). Setting the cap this high cost millions of extra dollars. There's no reason to do this--unless Kurt thinks the stock is going to at least $22.38. Kurt's original 10b5 plan, initiated in December, allowed him to sell about half of Hestia's stake in $PBI by the time it reached $14. He cancelled this plan in May. Now he's being paid in call options that, on average, don't even go in the money until $14. Speaking of doubling down, Permit Capital (part of Hestia's activist group) raised their stake in $PBI by 19% this summer, buying shares at a ~200% premium to their original cost basis. I think Kurt learned or realized something between December and May that substantially raised his expectations for $PBI's future.