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Ship Finance International Limited Message Board

  • marklibera marklibera Feb 8, 2013 11:38 AM Flag

    OT: Brent-WTI spread and more

    Many of us are now in the refinery stocks and enjoying a good run. I have a couple of thoughts.
    First, be careful of the fake-outs. The parent of ALDW, Alon USA, is publicly traded and just declared a 4 cent dividend. That story is picked up under the ALDW ticker but that is not the ALDW dividend. This confusion also happened with CVRR and its parent. Remember that the high-frequency computers that do most of the trading are programmed to read these headlines and react, so be careful.
    Second, ALDW was public only for the month of December, so its distribution will be pro-rata and not for a full quarter. Those expecting a full $1.25 or so may be disappointed (read: panic into selling), but their earnings report should contain the guidance to determine whether they are on target to pay the $5.25 that they projected in the prospectus.

    Finally, there's a Bloomberg story about a Goldman analyst's prediction of the Brent-WTI spread, which he predicts will shrink (which would be bad for the refinery stocks). But a story on zero hedge shows that this particular analyst has been dead wrong for several quarters. There is also evidence that most of Goldman's calls are wrong because their prop trading desk is taking the exact opposite side of the trade that is recommended by their analysts. Be careful when people talk their book (see Einhorn and his Apple views). Remember when Potter is buying and when he is selling.

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