David Einhorn is bullish on BioFuel Energy Corp. (NASDAQ:BIOF) and is planning on going activist. In a recent filing with the Securities and Exchange Commission, Einhorn and his fund, Greenlight Capital, have announced an increase in their stake from 1.42 million to 2.21 million shares. As a result, Einhorn and Greenlight currently hold approximately 35.5% of the company’s common stock. Einhorn has also sent a letter to the Board of BioFuel Energy, making a business proposal that would see him joining the Board of Directors.
The business proposal comes from David Einhorn and James Brickman, a real estate investor, who, together with Einhorn, controls a company BioFuel Energy is to invest in. According to the proposal, BioFuel is to fork out $275 million in cash and stock for the investment, Brickman is to become the Chief Executive Officer of BioFuel, while Einhorn would join the Board of Directors. Should the proposal be accepted, David Einhorn and Greenlight Capital would increase their stake to 49.9% of the total amount of shares outstanding.
The complete text of the proposal can be found below:
Only one other hedge fund that we track has invested in BioFuel Energy Corp.(NASDAQ:BIOF) – Dan Loeb‘s Third Point, which holds 1.04 million shares with a reported value of $1.78 million.
A producer and seller of ethanol and its co-products, BioFuel Energy Corp.(NASDAQ:BIOF) has a market cap of $36.8 million and does not pay a dividend. So far this year, the stock has advanced 256% to a current share price of above $6.00. The company has reported a net loss of $39.2 million for 2013, which translates into a loss per diluted share of $7.34.
During the previous quarter, Einhorn has made a significant new investment through the acquisition of 47.7 million shares of Micron Technology, Inc. (NASDAQ:MU), a position which is valued at $1.03 billion. Greenlight Capital has maintained two of its biggest positions, Apple Inc. (NASDAQ:AAPL) and General Motors Company (NYSE:GM) untouched. Einhorn and his fund hold approximately 2.4 million shares of the tech giant, valued at $1.34 billion and 17 million shares of General Motors, reportedly worth $696 million.