Enough of the pussy talk, there is coin to be made. Crack spreads are sprinting higher this morning, up more than 3% to $23.68. More importantly, WNR has an edge. Do you know what said edge is?
Let us begin.
Domestic refiners make their money from a multitude of spreads, one of which is gas—another Brent/WTI. WNR has their refineries in New Mexico, El Paso, Texas and Virginia. They are within delightful proximity to Cushings, Ok aka where the glut supply of WTI is stored. As the world burns, it is my belief the spread between WTI and Brent will widen. As it widens, the executive management team over at WNR will sit back, over a nice tall glass of scotch, and enjoy the ride. Profits will soar. The company will do $7 billion in revenues this year and yet only 35% of the shares are owned by institutions.
How does that stack up to the other refiners? Let’s have a look.
HOC: 99%
TSO: 89%
FTO: 83% (acquired by HOC)
MRO: 81%
HES: 80%
VLO: 76%
SUN: 73%
CVI: 60%
WNR: 35%
Does that make sense? Of course not. Furthermore, with WNR‘s earnings set to explode, thanks to widening spreads, coupled with an industry high 25% of shares sold share, I reckon the perfect short squeeze is about to occur. If you are managing money and need exposure to the refiners, you cannot ignore WNR, especially with a FPE of 9 and 35% institutional ownership. Just my two cents.
Aside from the refiners, I like the airlines for a hedge and I am warming up to the idea of beaten down large caps.
More on that later.
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trying hard to pump up WNR I like it
I do not pump, fuckface. I tell a story.
OUCH. Well, it worked with me. I bought it at 16.84. Late to the party but still made the party ( I hope). Good calls for me with X and TER so gotta believe. Thanks Fly man.
Well, I guess I should have procrastinated more………… cheaper this morning.
Bought another 1000 shares at 16.56.
http://farm4.static.flickr.com/3503/3260824922_912e36f489.jpg?v=0
Short interest is 20% fyi .. a million shares covered last week
Grab your $WNR
I like the beaten down large cap thesis
I have been starting to look in the same direction because it seems the russ2k is losing its luster
Plus, there are attractive co’s out there even without a rotation into large caps
Dlb looks interesting
I haven’t seen dlb on any screens I’ve ran because it has 0 yield and I’ve been using the dividend yield field in all of my screens
Check out the cup forming on WWE…
He beat me… Straight up… Pay him… Pay that man his money.
I just look at the comparison of charts of WNR vs VLO vs TSO vs etc. and it is easy to see that WNR is the mover – most up and down. I think that Tom in the burkha may be trying to mock The Fly.
I think the market is trying to lure in some shorts for a mother spike to the upside right now.
I have ANN, so I got me some LUV for my WNR.
Let me do my magic with WNR. I shall buy it, and it shall fall into a deep depression.
Read up on Katla volcano before deciding how much to put into airlines. How big is the risk factor? That’s very open to debate. But if it goes off, the airlines will really take a hit.
Rounders, what a great movie.
do you think wnr is a buy-out canidate?
hey raz how the hell are ya……..i thought the same thing. but me thinks mr. fly has touched on something better in that realm. low institutional ownership.
could be, im smoken on this one,,,,so far
How reliable are crack spreads in the short/long term? Who can trade them and who can’t? I know its a spread between futures contracts, but its not like futures are never manipulated…Or worse, is it like that stupid Dry Bulk Shipping Index that turned out to mean nothing…
Just questioning the basis for the thesis.
Here you go: http://tinyurl.com/6ay7w5v
Burning large caps. I like it.
GE? GM?
Crack spread moved from 3.8 to 2.3 in the last hour or so. For anyone who has tracked this number, does it tend to move so violently? Crude has basically stayed in the same place since the early morning. This is my first time ever paying attention to crack spread outside of the strip club.
Holy f___, 2.4 billion in 16 yrs
For you business builders out there, this guy is a success. He started selling sneakers 16 yrs ago. Now, sold the co to ebay. Good for him.
I worked there for the christmas season years ago.
http://www.thestreet.com/story/11062224/1/ebay-to-buy-gsi-commerce-for-24b.html
I’d better get my stupid ass back to work.
the webcast WNR gave last week, the CFO said their worst fear is rising oil prices forcing them to borrow (if possible) to buy the oil. Last week two firms issued oil price targets at $120-140. Any thoughts on the validity of this concern?
The worst scenario for WNR is a spike in oil prices, which if sustained, could translate into people cutting back on gasoline consumption, or worse yet, converting to low-power hybrid vehicles and smart cars. Very egregious.
(Disclosure: I drive a gas guzzling SUV)
Can someone explain how OpenTable is 106 right now, its PE is almost 200, they make 14 million a year and their valuation is 2.5 billion.
So?
$2.5 B mkt cap on $14 M net? I guess, PE’s are irrelevant in the bizarro market* of today.
If you look forward enough, you will see that everyone will be using OPEN to make reservations to eat expensive food at high-priced restaurants in large metro areas, while homeless people go hungry on the streets. OPEN will make 10X the money they are making now. People will have to make reservations 4 weeks in advance. Now that’s a formula for success! (*dripping with sarcasm*)
Even if they took in $140M/year, that is still a high valuation for the market cap. Everyone is just imagining that it will be like Taco-Bell in the movie Demolition Man. I don’t get it. Even if it grows earnings, I see a ceiling on potential given the macro-economic factors at play. A lot of people still google a restaurant, get the phone number, and call to make a FREE reservation. At least that’s true around here.
You don’t get charged by OPEN to make a reservation. They get their revenue from the restaurant itself.
_______
Because stock price is not determined purely by fundamentals.
My head is spinning.
Costanza, if you are a high risk taker, then short OPEN. Sometimes this works. You might win big. Or you could lose your a**. One never knows about these things.
I bought some April 105 puts for 4.00 and sold them for 4.70 20 minutes later.
Congrat, Costanza. Good trade!
Senor Fly. How do you account for the 50% insider ownership? The institutions can’t buy what they can’t buy. Unless you think insiders are going to be selling.
You really nailed WNR, nice 🙂
When you talk about WTI Brent spread widening do you mean the current spread compressing and we go back to WTI trading at a premium to Brent? If so I agree with you. Light and sweet is what everyone wants 🙂