Some institutions probably want no part of the spinoff, but as a long term investment I believe we will rebound.
I have already made my 20% ROI this year on other stocks, so right now I am simply looking for extraordinary event stocks at the moment.
I had to buy more on this drop to add to my future CST shares.
CST will be able to stand on its own without anymore capital contributions as long as the management team remains determined to do a great job. Cash is king and this new company can make a lot of it. The margins on products sold in the stores is at 29%, beating the other retail convenience store chains.
I don't see how this is a "dilution" of a stock price. You are thinking about this whole thing the wrong way. If I could get you to think outside the box and have you see what is really going on I would.
Go read Joel Greenblatt's book titled "You Can Be a Stock Market Genius" and find the chapter(s) on spinoffs.
Cheaper oil + less supply worldwide + greater demand exporting + less RIN expense as a result of exporting + lower feedstock on ethanol in 2013 + biodiesel plant churning out more RINs + hydrocrackers coming online.
This biodiesel plant should help offset some of the cost of RIN's. Also, I suspect that having all the ethanol plants running is another attempt at keeping the RIN purchasing costs lower.
Valero will make more money exporting to countries in the Carribean and Europe as the price of RINs rise. This will cause supply to shrink, which might exacerbate the gas prices we pay.
The bottom line is that Valero can be more focused upon the refining business now that the retail segment is being separated.
Why short this company when there is a large dividend coming?
Spinoff risk - In the case of more complex events, like a spinoff or issuing warrants, the potential losses can mount even more quickly. Even though you shorted one security to begin with, you could actually become short two securities (or possibly more) at the same time. What’s more, both pieces could move against you. For example, if you were short Altria when the company spun off Kraft back in 2007, all of a sudden you would’ve found yourself short both of these firms and your trade suddenly became more complex to manage.
At 27 billion we arrive at 4.5 X EBITDA.
If we can shed the California assets and concentrate on the south/midwest sections of the country I think we can be even more profitable.
The market will eat your heart out. If you believe it is a good deal then I would not sweat these short term price drops.
Valero can wait for 18 months before selling their 20% according to the registration documents.
Also, please realize that the 9:1 ratio makes sense, because there are only 76 million registered shares for CST.
Please mark this post so that you can return one year from now. I am still waiting on your fundamental analysis of the CST spinoff with actual balance sheet/income numbers.
CST returned 300 million in cash to Valero last year.... Think about that...
Thanks! I have been digesting the registration documents for hours over the past few days trying to get caught up on this spinoff. I was just made aware of Valero in the past week and there is a lot to learn about the entire refining business. But, this new company has a lot of potential, which is why I plan on keeping my shares in the new company for a while.