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