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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: ValueGuy who wrote (41949)	3/24/2011 3:04:29 PM
From: JakeStraw	Respond to of 78740

RE: Refiners - Keep this thought in mind; rising oil prices are not always actually good for refiners...

To: ValueGuy who wrote (41949)	3/24/2011 3:05:54 PM
From: Keith J	Respond to of 78740

There's still a lot of slack in refining. But North American crudes (WTI, Canadian, Maya) are selling at a discount compared to the rest of the world currently. This is allowing margins for U.S. refiners to be high currently, as there are no cheap product imports to be had. Valero tracks margins weekly and their data is very informative: valero.com (click on Key Commodity Prices and Differentials) You can see recent prices for various crudes from around the world at EIA: eia.doe.gov It is a current benefit to refiners, but unclear how long it can be sustained. KJ

To: ValueGuy who wrote (41949)	3/24/2011 5:42:04 PM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 78740

Refiners always look good when the crack spreads are high and they have a handle on oil prices they pay. When spreads tighten or they have to buy rapidly appreciating oil with no derivative protection, they are in the world of pain. The margins on refining are very tight, so the companies go from making money to losing money very fast. IMHO pure refiners are for traders only. Integrated companies with some refining can be bought by long term investors if they acknowledge that a large part of the company in terms of sales earns very small returns in terms of income. Even then, it's not clear whether investor wins compared to a company with no refining operations.

To: ValueGuy who wrote (41949)	3/24/2011 7:30:16 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78740

I like the refinery sector. I posted on them here, and at one point I owned shares in every publicly-traded refiner. In the early days nobody, or very few on SI bought&held refiners. With selective memory (I forget things), it seems like VLO turned out though to be about a 20+ bagger for me on some of the shares I bought in '02 after I held them for a few years. Maybe more for HOC. Maybe a 8-10 bagger for TSO. Late to the game with other adds, so much smaller gains, and a few losses with the last buys I made in diversifying after all stocks in the sector had risen. ========== Sorry I've missed this last cycle. It seems it's always scary to buy these things near the bottom. Hardly anybody's ever positive on the sector, and at lows there's always predictions of either the companies going bankrupt or foreign competition or something never letting them recover. The positive mention is always -- and always irrelevant imo - that no new refiners have been built in the USA for maybe 20-25 years. My favorite in the sector was and is VLO. I am guessing VLO might be bought, bought by me anyway, if I see price dropping below tangible book value. That's where I came in before (8-9 years ago), and that's the point where I might be interested again. SI shows tangible bv at about $26 vs. stock price of about $28. For TSO, p/tbv = 1.23, so I prefer VLO. VLO also has a lower d/e ratio. This all jmo, I've not been following the sector for a few years. (I believe I tried a rentry speculative buy in '09, and I quickly concluded that I was on the wrong side of the cycle. My premise being that there is a cycle, and not a decimation of the industry -- many would disagree with me.) GLTY