BioFuel Investors Find Following the Smart Money May Be a Dumb Bet: StockTwits

NEW YORK (TheStreet) -- Shares of ethanol producer BioFuel, (BIOF), got cut down this morning after shooting up like a magic beanstalk on news that a prominent hedge fund investor increased his stake and proposed that the company acquire a real estate developer. The price action spurred debate on StockTwits.com between BioFuel bulls and bears on the wisdom of chasing "smart money."

$BIOF Continues to create bags on both sides of the trade.

-- Sjvan (@sjvan) Apr. 1 at 09:36 AM

The small-cap company saw shares rise from $3.16 to close at $7.30. This morning, shares retreated 12% to $6.41.

Bull Argument: Trade Like The Big Boys

The primary argument for BioFuel bulls is that Greenlight Capital's David Einhorn is no dummy. Einhorn's hedge fund has returned 19.5% a year, on average, to investors since its inception in 1996, according to Greenlight's latest shareholder letter, released Jan. 21. If Einhorn thinks BioFuel has promise, then it probably does.

$BIOF Greenlight's Einhorn's trying to get his company some assets and start making it money and you people are bearish??

-- Timothy Daube (@Timothykpny) Mar. 31 at 08:10 PM

$BIOF Downplay spin it all you want it how some other stock in sector seems better Blah blah. They don't have Einhorn and green light

-- Heikin-Ashi (@a5hi) Mar. 31 at 10:18 PM

Bear Argument: Smart Money Doesn't Often Out-Smart The Market

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