Absolutely no reason to sell after today right? Impatient special sitters I imagine. How does mgmt not start buybacks at this point. Stock dividend isn't a taxable event though - why don't they just distribute DKL?
Agreed on the former (posted the comment below elsewhere but reproducing in case you didn't see it)
On the stock dividend: I am not sure; obviously corporate taxes get complex. I think a spin of shares would be taxable in this case given their ownership; however, I believe an exchange would not be. I do think mgmt is eager to continue realizing the discount; I'd actualyl prefer if they just started hoovering up shares at this price and then worry about a distribution / split later.
(Comment on result below)
I'm shocked by the move today; between the W2W cash plus the retail sale, you're now getting the company with a net cash position. DKL is ~$21/share of value at market prices, and set to deconsolidate. Th erefiners aren't reat, but they can generate crazy cash flow in a tight market and we're getting them more than free (and the company is positioning themselves to deconsolidate or maybe even sell DKL now that they have an LT contract with DK and lots of third party earnings coming on) . In the short run, the move sucks, but if the company does open up the buyback spigot obviously it could be better for LT shareholders
I suspect the two reasons for the drop is
1) pods just exiting on lack of full break up / "catalyst passing"
2) the company was really cagey with disclosure; maybe people think they're trying to pull a fast one? (multiple analysts pressed them on the W2W valuation and the ebitda coming back to DK, and the company was really unclear IMO)
I'm travelling on a DD trip today, but will have a full note on this (plus some other updates given a ton of earnings tmr/Thursday) later this week / weekend.
I think it's a fantastic deal; i'm surprised the stock isn't up quite a bit on it (obviously market down quite a bit today, but even with that i'm surprsied stock isn't up more)
the hope is that these proceeds get plowed back into share buybacks, but we'll see. Either way, this is ~20% of the market cap in cash, and it's from assets I don't think many people gave them credit / valeu for
Thanks for the quick response. Felt like a great buying opp even though I'm in too large as it is. My next question was going to be what catalysts remain but it sounds like you think potential buyback is the main one...
I think (aand hope) management is eager to buyback shares, and getting this done should set them up to do it (they'd indicated to me they were blacked out)
other catalysts would be cleaning up DKL, doing something with W2W, or crack spreads recovering..... but it obviously feels nice to get this much cash on to an underlevered BS
Absolutely no reason to sell after today right? Impatient special sitters I imagine. How does mgmt not start buybacks at this point. Stock dividend isn't a taxable event though - why don't they just distribute DKL?
Agreed on the former (posted the comment below elsewhere but reproducing in case you didn't see it)
On the stock dividend: I am not sure; obviously corporate taxes get complex. I think a spin of shares would be taxable in this case given their ownership; however, I believe an exchange would not be. I do think mgmt is eager to continue realizing the discount; I'd actualyl prefer if they just started hoovering up shares at this price and then worry about a distribution / split later.
(Comment on result below)
I'm shocked by the move today; between the W2W cash plus the retail sale, you're now getting the company with a net cash position. DKL is ~$21/share of value at market prices, and set to deconsolidate. Th erefiners aren't reat, but they can generate crazy cash flow in a tight market and we're getting them more than free (and the company is positioning themselves to deconsolidate or maybe even sell DKL now that they have an LT contract with DK and lots of third party earnings coming on) . In the short run, the move sucks, but if the company does open up the buyback spigot obviously it could be better for LT shareholders
I suspect the two reasons for the drop is
1) pods just exiting on lack of full break up / "catalyst passing"
2) the company was really cagey with disclosure; maybe people think they're trying to pull a fast one? (multiple analysts pressed them on the W2W valuation and the ebitda coming back to DK, and the company was really unclear IMO)
I'm travelling on a DD trip today, but will have a full note on this (plus some other updates given a ton of earnings tmr/Thursday) later this week / weekend.
Is this a good deal or is the selloff just regular DK pessimism?
https://ir.delekus.com/news/news-details/2024/Definitive-Agreement-Signed-for-FEMSAs-Acquisition-of-Retail-Assets-from-Delek-US/default.aspx
I think it's a fantastic deal; i'm surprised the stock isn't up quite a bit on it (obviously market down quite a bit today, but even with that i'm surprsied stock isn't up more)
the hope is that these proceeds get plowed back into share buybacks, but we'll see. Either way, this is ~20% of the market cap in cash, and it's from assets I don't think many people gave them credit / valeu for
Thanks for the quick response. Felt like a great buying opp even though I'm in too large as it is. My next question was going to be what catalysts remain but it sounds like you think potential buyback is the main one...
I think (aand hope) management is eager to buyback shares, and getting this done should set them up to do it (they'd indicated to me they were blacked out)
other catalysts would be cleaning up DKL, doing something with W2W, or crack spreads recovering..... but it obviously feels nice to get this much cash on to an underlevered BS