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The Baupost Group's 4Q13 positions: An investor's must-know guide

Part 2
The Baupost Group's 4Q13 positions: An investor's must-know guide (Part 2 of 6)

The Baupost Group buys a small position in Alon USA Partners

The Baupost Group and Alon USA Partners

Seth Klarman’s Baupost Group started new positions in Fidelity National Financial Inc. (FNF), Kindred Biosciences Inc. (KIN), and Alon USA Partners LP (ALDW) and increased its positions in Idenix Pharmaceuticals (IDIX) and PBF Energy Inc. (PBF).

The Baupost Group added a small stake in Alon USA Partners LP (ALDW) that accounted for 0.16% of the fund’s total portfolio.

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Alon USA Energy (ALJ) spun off Alon USA Partners in an IPO late in 2012. Alon USA Partners is a Delaware limited partnership that owns and operates a crude oil refinery in Big Spring, Texas, with total throughput capacity of approximately 70,000 barrels per day. Alon Partners refines crude oil into finished products, which are marketed primarily in West Texas, Central Texas, Oklahoma, New Mexico, and Arizona through its wholesale distribution network to both Alon Energy’s retail convenience stores and other third-party distributors.

Alon USA Partners’ net income for the fourth quarter of 2013 was down to $13.5 million from $113.2 million for the same period last year. Net income for the year ended December 31, 2013, was $136.2 million compared to $381.9 million for the same period last year.

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In 3Q 2013, the company saw shares plunge after it reported a net loss and announced that there’s no cash available for distribution. The company’s third quarter results were impacted by a volatile and deteriorating margin environment resulting primarily from decreasing discounts for West Texas crude oil. Plus, the results were affected by backward movement in the crude market and unplanned downtime at the company’s Big Spring refinery during the second half of September.

In 4Q 2013, the Big Spring refinery ran well, achieving a record quarterly average throughput of 73,613 barrels per day. As a result of the strong operational performance, the refinery’s direct operating expense was under $4.00 per barrel for the fourth quarter of 2013. Alon USA Partners experienced a sequential improvement in its fourth quarter 2013 results, as it benefited from widened discounts in Midland-priced crudes relative to Cushing-priced crudes. For the first quarter of 2014, the company expects throughput at the Big Spring refinery to average approximately 73,000 barrels per day.

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