E_K_S, about GI: Yes, I bought GI based on low p/book primarily. Well-known that new refineries weren't being built, so maybe the GI assets were actually worth somewhere around book or maybe even more. Also bought based on very low p/e. PSR was very low too, but price/sales always seemed to be low for this and other refiners, so this was not an important metric for me.
OTOH, I bought small because:
1. Maybe no NEW refineries were being built, but old ones were continually being upgraded & expanded, and there were better capitalized players with these big old refiners, e.g. Chevron, Exxon.
2, GI had a high d/e ratio.
3. I didn't (and don't) understand GI's geographical locations and benefits/risks thereto. They had two refineries in New Mexico and a pipeline to some New Mexico/Arizona cities. They also owned some retail stations in those areas. Very dinky company, imo. Additionally and scary, there seemed to be persistent rumors that a bigger player wanted into GI's territory, and it could & would do this by building its own pipelines to the areas. An even worse competitive threat rumor was that another refiner might want the crude supply sold to GI, and if such a deal were made, it could leave GI 'dry'. |
