We came across a bullish thesis on Calumet, Inc. (CLMT) on Twitter by Zerosumgame33. In this article, we will summarize the bulls’ thesis on CLMT. Calumet, Inc. (CLMT)'s share was trading at $9.91 as of April 11^th. CLMT’s trailing and forward P/E were 23.06 and 11.35 respectively according to Yahoo Finance.

A technician in a protective suit testing a variety of different lubricants and filters.

Calumet Specialty Products (CLMT) has undergone a punishing 50% drawdown, primarily due to its leveraged equity structure and fears of a recession weighing on already depressed—but ultimately temporary—margins. A wave of selling was triggered by event-driven funds exiting after a Department of Energy (DOE) catalyst, exacerbated by a lack of institutional support and nearly 10 million shares shorted. Despite this, the long-term bull thesis remains intact. The key driver is an imminent margin inflection in the biodiesel (BD) market, where the supply-demand imbalance is becoming acute. Based on January EPA data, BD production fell by ~150 million gallons in a single month, pushing total supply below the 2025 Renewable Volume Obligation (RVO) level. With the D4 RIN bank likely to be exhausted within months, this sets the stage for a sharp recovery in margins as demand exceeds supply.

Montana Renewables (MRL), CLMT’s crown jewel, is in a uniquely advantaged position. Unlike peers still running soybean oil, MRL uses a more cost-effective 50/50 blend of corn oil and tallow, supporting better margins. The real catalyst is the upcoming 2026–2028 RVO, expected to be released around August or September. While the current RVO was set too low by the Biden administration (creating a margin overhang), a Trump administration is likely to revise this upward based on the new renewable diesel capacity that’s come online. Once that happens, margins could return to $2.00/gal, putting MRL at $250M EBITDA and CLMT at a $500M run-rate on a $2.9B pro forma EV—an exceptionally cheap valuation at $10/share. Even under more conservative assumptions, MRL’s EBITDA would support a robust valuation. Warburg’s base case targets a $3.3B exit EV by early 2028, translating to a $40 CLMT share price.

Calumet, Inc. (CLMT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held CLMT at the end of the fourth quarter which was 9 in the previous quarter. While we acknowledge the risk and potential of CLMT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CLMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.