8 Comments

Thanks for the article, as always. We agree with your calculation that this sector has room to move.

Yesterday we posted about Icahn, and briefly mentioned CVI and it’s potential spin-off of UAN. It’s an intriguing setup.

https://specialsituationinvesting.substack.com/p/six-reasons-to-consider-riding-carl

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One point to add is that it is very difficult to build a refinery in America, so adding capacity to address high crack spreads is not going to happen. Given the capacity constraints, there is a risk of supply shocks which add to the risk premium.

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Great article Andrew. Enjoyed your published Tegus calls where there were a lot of discussions regarding renewable diesel refineries. Would be interesting to hear how you view that space in comparison to the legacy players. I know that you mentioned both Vertex Energy and CLMT in those calls. I belive CLMT can have a great performance next 24 months with ramping up MRL (and monetize it).

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What benchmark / index etc to look at for correlation between crack spread and refinery stock prices?

I tried to look for a 1:1 or 321 spread index that is chartable. but couldn't find one.

assuming the final product doesnt move that fast, i ended comparing with WTI.

https://www.tradingview.com/x/nFNKmJNp/

Any pointers ?

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Great work, Andrew. Thank you!

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If you think DGD is worth a ton then Darling Ingredients is very interesting given scale of DGD vs EV of Darling

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