Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of biofuels maker Renewable Energy Group Inc (REGI) dropped 15% today after the company was downgraded by an analyst.
So what: The stock was downgraded to a hold rating by Canaccord Genuity, which sparked the sell-off today. The driver of the downgrade was the Environmental Protection Agency's announcement on Friday that it was proposing a reduction in ethanol required in the U.S. fuel supply.
Now what: The U.S. is using less gasoline, which means that if the EPA's renewable fuel target was kept constant it would make up a higher percentage of the country's gasoline blend. So, the EPA reduced its target for renewable fuels, which would reduce demand for Renewable Energy Group and its competitors. I think there are better ways to play renewable energy, particularly ones that don't require as much government intervention, which is why I'll stay out of this drop today.
