Why Gevo Inc. Reinvested in Gevo Inc.
Gevo Inc. is a perfect example of a company that is letting its money do the talking. In the midst of a dispute over technology patents and a tough market for its alternative profit stream (ethanol production), their recent actions could be viewed as bold, maybe risky, but if nothing else, refreshing.
The company has approved a stock repurchase program for $15 million of its common stock to be bought back over a one-year period. Why? Brant Demuth, executive vice president of strategy and corporate development, offered this when I asked. “The board feels that our current stock price does not reflect the potential of our technology platform and therefore is very undervalued.” Or, in simpler terms, at least as I see it, the company believes in its technology platform, the market for its technology and is willing to invest in itself and its shareholders. Patrick Gruber, CEO, said something to that effect in a statement on the buyback announcement. “This new stock repurchase program reflects our confidence in Gevo’s future,” he said.
Demuth says the buyback will be disciplined and is structured with specific rules. The timing, volume and value of the shares that are repurchased will depend on factors including the stock price, market conditions, applicable legal requirements and others. The company put a $15 million limit on the buyback plan, but Demuth says the company has the funds sufficient to support the optimization of its technology as well as existing operations, while also supporting a share repurchase program of this size.
The company currently has 140,515 common stocks. The 52-week high was $11.29 and the 52-week low was $1.36. The current price is $1.87. If the company is right, and it is truly undervalued, then as their current trading numbers show, the company just made a play for a great investment, itself.