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HollyFrontier Corporation Message Board

  • kbononi kbononi Aug 27, 2013 8:22 AM Flag

    new to HFC

    what does it follow?? the spread I assume...I see WTI pushing higher and HFC is stuck??

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    • Seeking Alpha has good rundown- basically the 'spread' does not effect Holly as severely as other refiners- since they can handle 'heavier crude'.

      "A common misconception with oil refineries is that they all process the same grade of crude. This is certainly not the case. All refineries are not created equal, and they are rated using an industry term known as the Nelson Complexity Index. The index is essentially a weighted score of the ability of a certain refinery to process crude into refined products and distillates. The higher the number, the more products a refinery can handle and refine.

      Clearly, refineries with the highest index score are at an operational advantage in leveraging current assets to refine heavier crude, and HFC currently holds the highest average Nelson Index score at 12.1. Thus, as the Brent-WTI spread narrows, HFC will find it far easier to switch to refining heavier grade crude than its peers. For North American refiners, heavier grade crude entails Western Canadian Sands grade crude ("WCS"), which trades at a significant discount to both Brent and WTI due to its API and sulfur content mixture'.

      Sentiment: Strong Buy

    • kbononi.....see a 10 day chart with 5-day SMA. HFC follows THE DIRECTION of the 5SMA.
      This is true of all stocks. Basically IT IS JUST MOMENTUM TRADING simplified.
      In last 10 days, WNR and PSX traded almost lock-step with HFC.
      Four other refiners had similar charts,but with much lesser gains.
      Obvliously this was an industry-wide effect.

    • Kbononi, I trade HFC quite a bit. But to be honest, I don't really know alot about them. I buy and sell naked puts, collars, and collect dividends on them. It's a great stock to trade. Not sure if I'd "buy and hold" it. but then again, I seldom hold ANYTHING past a month or two...but I'm an income trader, so my objectives are probably not the same as yours.

      Good luck, its a great stock! And they love special dividends!

      Sentiment: Hold

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