Carl Icahn's Newest Beneficiary
Corporate democracy does not exist. Critics of activism state that activism may be good for the activist but not for other stockholders. Yet shareholder value has risen by many billions of dollars in the companies we have targeted over the years. I believe this proves conclusively that all shareholders, not just us, benefit from our involvement, and, perhaps even more important, the changes we institute at these companies cause them to become more productive, and therefore enable them to compete with foreign companies more efficiently, which in turn creates more jobs–something this country needs.
Well, recently it would appear that Icahn has chosen a new company to pick apart and fix. On May 31, Icahn increased his holdings in CVR Refining (CVRR) by 1646.51%.
Icahn’s History with CVR Refining:
During the first quarter 2013, Icahn made his first buy into CVRR by purchasing 4 million of the company’s shares representing 2.71% of their shares outstanding. He purchased these shares at an average price of $30.55 per share. This transaction represented a 0.82% impact to his portfolio.
On May 20, Icahn increased his holdings 50% by adding an additional 2 million shares of CVRR, increasing his holdings to 4.07% of the CVR’s shares outstanding. He bought these shares at an average price of $30.50 per share. This buy represented a 0.36% impact to his portfolio.
Most recently, on May 31, Carl Icahn made a massive buy of CVRR stock. Icahn bought a total of 98,790,764 shares of CVRR at $30.36 per share. This buy represents a 1646.51% increase on his total shares and a 17.76% impact to his portfolio. The guru’s most recent increase gives him a total of 104,790,764 shares of CVR Refining, making up a massive 71% of the company’s shares outstanding.
Carl Icahn is the only guru that holds stake in CVRR.
About CVR Refining
CVR Refining is an independent downstream energy company with crude oil refining, gathering and refined petroleum product marketing operations located in the Midwest. The company is focused on increasing profitability through growth opportunities while remaining committed to unitholder value and safe and environmentally conscientious operations.
The company is headquartered in Sugarland, Texas. The petroleum business includes a 115,000 barrel per day oil refinery operated by Coffeyville Resources Refining & Marketing in Coffeyville, Kan. The company also owns a 70,000 barrel per day refinery operated by Wynnewood Refining Company in Wynnewood, Okla., along with approximately 350 miles of pipelines, more that 125 crude oil transports, a network of crude oil gathering tank farms and more than six million barrels of owned and leased crude oil storage capacity.
CVR Energy (CVI) currently owns all of the interests of CVR Refining (other than the managing general partner interest and associated IDRs). Icahn has held significant stake in CVR Energy since the fourth quarter of 2011. Icahn holds 82% of CVI Energy’s shares outstanding. Since Icahn’s initial buy into this company, the share prices have increased 165.8%.
Recent Happenings at CVR Refining
On May 20, CVR closed its public offering of 12 million common units representing limited partner interests at the public offering price of $30.75 per common unit.
CVR Energy (the managing company of CVR Refining) announced a special dividend of $6.50 on May 28. The total amount of the special dividend payment will be approximately $564 million and brings the company’s cumulative dividends declared in 2013 to approximately $1.1 billion.
Carl Icahn had this to say about the company’s dividends:
Surpassing the billion dollar mark in returns to our stockholders by mid-year speaks volumes about the strength of our operating performance. Our repeated ability to return capital demonstrates our ongoing commitment to providing outstanding value to our stockholders.
On June 10 Goldman Sachs initiated coverage on CVR Refining with a neutral rating.
As of March 31 the top institutional holders of CVR Refining were:
· Carl Icahn with 4,000,000 shares, or 2.71% outstanding.
· Morgan Stanley with 3,238,788 shares, or 2.19% outstanding.
· Commerzbank Aktiengesellschaft with 1,021,602 shares, or 0.69% outstanding.
· Gilder, Gagnon, Howe & Co. with 658,827 shares, or 0.45% outstanding.
· Goldman Sachs Group with 416,149 shares, or 0.28% outstanding.
The company’s IPO earlier this year brought in approximately $700 million for the company
CVR Refining has a market cap of $4.54 billion; its shares were traded at around $30.54 with a P/S ratio of 0.50. The dividend yield of CVR Refining is currently at 5.20%.
CVR Refining’s first quarter results reported the following:
· 2013 full quarter distribution of $1.76 per common unit.
· Adjusted EBITDA of $309.9 million compared to the adjusted EBITDA of $143 million for the first quarter of 2012.
· Record quarterly crude oil throughput of 194,816 barrels per day.
· Record quarterly crude oil gathering of 50,549 barrels per day.
CVR Refining’s price and P/E ratio:
The company’s P/S and P/B ratios:
While Icahn is the only guru that holds a stake in CVRR, there are currently four gurus that maintain positions in CVRR’s parent company CVI. Click here to see their holding histories in CVI.