PBF

PBF Energy($PBF): Insiders Pour Millions Into Stock for 10 Months While Shares Plunge 50% - What's Behind This Disconnect?

04/03/2025 20:22

While shares of PBF Energy ($PBF) have plummeted over 50% in the past year, one institutional insider has been making an extraordinary contrarian move. Control Empresarial de Capitales SA de CV, a beneficial ownership entity, has consistently executed massive stock purchases over the past ten months despite the stock's relentless decline, catching the attention of market observers. The entity has been buying PBF Energy shares almost weekly from June 2024 through April 2025. Notable purchases include 600,000 shares (approximately $26.5 million) on June 14, 2024, another 600,000 shares (about $26.4 million) on June 21, 805,300 shares (roughly $26.3 million) on September 5, and a remarkable 1 million shares (approximately $31.8 million) on October 15, 2024. This consistent buying pattern hasn't wavered even as the stock price dropped from the $40s to below $20 currently. Despite this aggressive insider buying, $PBF's stock price has continued its downward trajectory. Starting from around $44 per share in June 2024, it has fallen to the $19 range currently. The decline accelerated notably after a fire at the company's Martinez refinery in February 2025. This fire dealt a significant blow to PBF Energy's operations and financial outlook. In early March, the company announced that repairs at the Martinez refinery would cost approximately $30 million, and the restart of fire-damaged units would be delayed until the fourth quarter of 2025. This directly impacts the company's refining capacity and profitability. The poor stock performance reflects broader industry challenges beyond the fire incident. The U.S. refining industry has been facing severe headwinds due to weakening fuel demand and shrinking refining margins. In August, PBF Energy reported a larger-than-expected quarterly loss, primarily due to gross refining margins per barrel declining by more than 40% year-over-year. The company's 2024 financial performance illustrates these challenges. Revenue decreased to $38.33 billion, down 18.16% from 2023. Net income fell to $2.14 billion, a 25.59% decline. EBITDA dropped to $2.59 billion, representing a 45.1% decrease. The most recent quarterly earnings showed a loss of $2.82 per share. Yet, Control Empresarial de Capitales' consistent buying suggests this entity sees long-term value in PBF Energy. Notably, the company's price-to-book (P/B) ratio stands at just 0.4x, indicating potential undervaluation relative to asset value. PBF Energy operates six refineries across the United States with a combined processing capacity of approximately 1 million barrels per day. The company produces a range of petroleum products, including gasoline, ultra-low-sulfur diesel, jet fuel, and lubricants. Despite this broad business portfolio, the market appears focused on the company's short-term challenges. The insider's persistent buying could be interpreted in several ways. First, they may believe the current stock price fails to adequately reflect the company's intrinsic value. Second, it could be a strategy to increase influence over company decision-making through greater ownership. Third, they might be accumulating sufficient shares to explore future acquisition possibilities. The market is also watching the implications of the United States revoking Chevron's license to export oil from Venezuela. TD Cowen has noted that this could lead to increased procurement costs for heavy crude oil for U.S. Gulf Coast refiners like PBF Energy. Venezuela is the fourth-largest oil supplier to the United States, and PBF Energy is among the major buyers of Venezuelan crude. Looking ahead, PBF Energy's stock direction will depend on several factors. Successful repair and restart timing at the Martinez refinery, recovery in refining margins, and improved fuel demand trends will be critical variables. Additionally, crude oil price fluctuations and new trade policies could impact the company's raw material costs. Currently, analysts maintain a largely neutral stance on PBF Energy, with a median 12-month price target of $34.50, significantly higher than the current stock price. However, analysts project further declines in revenue and EBITDA for 2025, suggesting that short-term performance improvements may be challenging. This disconnect between persistent large-scale insider buying and continuing stock price decline presents an intriguing situation for investors. Whether Control Empresarial de Capitales has identified a catalyst for stock recovery or is simply betting on PBF Energy's asset value should become clearer in the coming months.

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