Refiner Seasonality

Due to the recent decline in the refiners, you’ve all become experts on the industry, professing to know all there is about crack spreads and share price correlations. Well then, Sir dick facing ass fucker, let’s go over the actual facts and not conjecture, shall we?

Here are some composite seasonal statistics (monthly) for the refining industry, courtesy of The PPT:

March 4.95% 187 103 64% 36%
April 2.31% 171 114 60% 40%
May 2.55% 180 112 62% 38%
June -1.96% 119 172 41% 59%

In summary, I started buying the refiners in March, when seasonality was at its apex. During the month of April, I am up on both CVI and ALJ, while down 1% on WNR. As you can see by the irrefutable data above, selling this industry into May has been a losing trade, 62% of the time.

Specific to WNR, the month of May has been especially bountiful for shareholders, up 60% of the time for an average return of 10%. Compared to an average loss in April of 3.9%, I’d surmise the time to own WNR, based upon seasonal data, is in May.

Here is the May data for WNR, dating back to 2007:

2010: -1.87%
2009: +13%
2008: +26.7%
2007: +24%

As the market heads towards 14,000, my WNR is being ground in between the gears of hell. Some might say “oh, someone knows something, which is why it is trading lower.” That’s not true. Stocks go down for all sorts of reasons. Perhaps some junior trader at some fucked up hedge fund got chastised over buying WNR. The conversation went something like this:

Boss: What the fuck is this WNR shit? Jim Cramer said to sell the refiners and you are buying?
Junior Trader: But, Sir, “The Fly” is buying it and he is “awesome and amazing.”
Boss: Who the fuck is this Fly guy? All I know, refineries are a shitty business. I want it sold, NOW.
Junior Trader: But, Sir, we might take a loss on it. And, all of the other refiners are trading up today.
Boss: Who gives a shit, you faggot? Jim Cramer says sell I ask him how much? Sell it all or you’re fired.
Junior Trader: No problem.

That’s pretty much how a forced liquidation happens, which in turn makes a stock trade lower. Naturally, this is pulling for straws, making excuses for a stock trading down on a great day. However, I’ve seen this shit before and the selling of a specific name in a kick ass sector is rarely majestically prescient.

Back at it tomorrow.

For the day, I bled out another 1%, helped by VCLK, FORM, SHLD, OXY and CVI.

Incidentally, this disaster at home is a major boon for Mrs. Fly. Despite our intentions to not live in this house, she gets to do all sorts of renovations, making things new again “all shiny and beautiful.” I will have you know, white is quite fashionable these days, from what I hear. We have no intentions of selling this idiot box of a house. Instead, I intend to let it just linger here forever, making it a place to sleep in when we are visiting NYC. From my vantage point, unless one needs the money, one should not sell real estate. Wealth in real estate, from what I am told, is made through accumulation, not swapping.

I sold half of my PLAB, after it slid 3% from my basis. I have no desire to establish new losing positions. I will keep a short leash on non-essential positions.

Finally, the refiners look better today, save WNR. Give it some time; I am sure it will firm up as the day progresses.

If there is one stock that embodies the very definition of short squeeze, it’s SHLD. Shorts hate it more than Muslims hate on gay Jewish alcoholic catholic priests fighting for contractors in Iraq. The Chairman is a fucking hedge fund manager, Eddie Lampert. It’s a Jim Cramer fav. And, to boot, their fucking stores suck. Yet, they still manage to generate lots of cash. Plus, they own a fuckload of real estate.

Any minor uptick in sales causes the stock to run naked through the streets of Wall, stabbing short sellers in the eyes until the tip of the blade falls off. It truly is one of those stocks.

Yesterday, JAH posted better than expected results. In my opinion, as well as the opinion of others, this bodes well for SHLD, as JAH‘s shit lines their store shelves. Give SHLD a reason to run, Mr. Burlap short seller, and it will turn your brokerage account into a zero sum, inactive account, subject to closure.

At the present, SHLD is my second largest position.

I am not sure where the market is going today. However, it’s rather obvious the dollar is heading lower. It seems we are in a loop, like the movie groundhog day. Some of you think stuff is changing. But in reality, everything is exactly the same.

After enduring heinous early morning losses, they abated—leading to a draw down of just 0.3%. Although WNR did not reverse to the upside like other refiners, the action was still impressive. Never forget: hot money stocks get real cold quick. You need to stomach and endure the pain, in order to enjoy the fiery nirvana later.

Nevertheless, I injected a little viagra into my WNR position, late in the day. I sold out of X for a 14% loss and most of my OXY for a 5% gain. With some of the proceeds, I added to SHLD and of course WNR. As we speak, SHLD is my second largest position.

Just to reiterate my position: WNR is unique in the refining space due to the location of their El Paso refinery, which gets crude from the Eagle ford shale and Cushings. While other refiners pay top dollar for gulf crude, WNR gets a sweet discount because there are no pipelines coming out of Eagleford yet. Hence, that crude trades at a discount.

Using The PPT search function, the following companies have the phrase “Eagle ford” in their company description.

CHK, COG, CRZO, EOG, ETP, LEI

I added to my SHLD position and bought another 15,000 WNR.

I sold out of X and 90% OXY.

With WNR down more than 6% now, I am reminded of the rout in my silver stocks when I was visiting North Carolina back in February. Upon landing, I was getting nailed in AG and EXK to the point where I was close to booking the losses and moving on. However, I kept my cool and ended up minting money on both ideas.

WNR, as well as all of the refiners, has a lot of hot money shareholders, people who only care about making coin right now. I’ve seen these people before; they sashay in and out of stocks only for the decadent pleasure of it all, nothing of substance. Let me remind you that WNR, VLO and HOC are operating under ideal scenarios, from a business perspective. Aside from recent share price performance, these are great businesses to be long. All hot sectors go through periods of adjustment, through panic. But if the fundamentals are solid, eventually, you will be rewarded.

Specific to the pinless hand grenade action today: I can only tell you to position defensively, so that you are not flushed out with some margin liquidation. As you know, I have 250%+ of my personal in WNR, which has undergone a real 13% correction times 2.5 this week. In other words, I am barely up for the year. This is NOT the sort of investment style you should be copying. It’s reckless and foolish.

Nevertheless, I am literally playing with the houses money, so there is a certain degree of security in that.

For managed accounts, I am very overweight refiners, specifically WNR and CVI. Thus far, in 2011, I’ve had some really good runs, only to give it back during periods of correction. Frankly, assessing my performance year to date, I’ve been abysmal. I sold out of plenty of good stocks too low, like OPEN and FTK. And, I held onto losers too long, like MOTR and BORN. These are classic mistakes that are easily avoided using standard stop losses.

Bottom line: I am likely going to shake things up a bit, in an effort to find my groove again. As for the refiners, I am not selling out due to VLO’s issues. Aside from hedges, the underlying EPS for their qt. was $1.00, .70 cents better than expectations. With crack spreads sustaining $25, it’s only a matter of time before these fuckers turn around again.

Some are very good at explaining their ideas and methods, by example. It’s their gift of patience, greedy proclivities, or the fact that no one else will listen to them, that leads them to such a profession. Mind you, being a teacher is not a noble profession unless it’s done with good intentions. There are excellent teachers on this site, like ChessnWine, Ragin Cajun and Scott Bleier, who can walk you through ideas, like pissing in the breeze with ease. I, on the other hand, do not teach because I do not like to tell you anything.

It all started when I was a young boy, throwing 90mph fastballs at the heads of unsuspecting rivals. When I dropped the hook on them, making them swing and miss like school girls in the boys gyms class, they’d ponder how I learned to throw such a pitch. As far as I viewed it, it was none of their concern. As fate would have it, by senior year, my rotator cuff gave way, also leading to the birth of my quest towards financial wizardry. But, to be perfectly blunt with many of you (not all), I loathe the idea of teaching anything, for I feel as if my life is not complete. I realize this is a character flaw, which in turn keeps the fire in my stomach burning red hot. I can only tell you my habits and allow you to rent my financial tools (The PPT); but I am not ready to profess anything, as long as fuckers like DAVID TEPPER are out there banking billions through weak performance data.

In the world of twitter and smoke with mirrors, many claim to be the real deal. Being that I am mostly anonymous, I cannot pass judgement on the respective track records of any of my rival bloggers out there. However, I will tell you, emphatically, they are indeud dick suckers of the first order. Most of them have never held proper corporate employment and tend to live a very, shall I say, laissee faire life, sucking on twizzlers whilst declaring market wins. I am very sorry to tell you, your financial advice is unpolished and woefully inadequate, especially compared to the stuff published here on iBC.

If I was in your shoes, a Joe Public reader of sorts, I’d declare all other financial websites to be null and void, immediately, as their panache simply doesn’t match up to the Clam-like times we live in now. If I was you, I’d most certainly cancel any and all subscriptions held away from iBC and donate said soft dollars to Woodshedder, so that he too could celebrate Christmas this year.

In the big scheme of things, we’re all dipshits, some more than others. Everyone has an opinion, which most of the time is nothing more than a vote into a collective train of thought. There are very few out there who think outside of the cluster-fuck, if you know what I mean. I tend to abhor mankind, which is why I am able to outstrip you, every step of the way.

I was down about 1.6% today, despite large gains in FORM, OXY, SHLD and CY. My big dicked WNR/CVI positions came home to roost today, as every gay male west of Japan sold refiners with reckless abandon. I will not bitch and moan about the “dumbness” of the market or how unjust it treated me today. It is what it is, right or wrong. On most days, I bathe in my enemies blood, while eating their livers. However, today, those fucking bastards are eating mine.

After the bell, it appears FORM blew out EPS estimates.

In summary, I doubled my SHLD position today and started a new one in PLAB. And, I got my brains blown the fuck out in my refinery stocks. That’s all.