PBF

PBF Energy ($PBF) Paradox: Major Shareholder Continues Buying for 10 Months Despite 66% Stock Decline

04/09/2025 20:21

As the U.S. refining industry faces challenges, PBF Energy ($PBF) continues to see its stock price decline. Interestingly, despite this downward trend, the company's major shareholder, Control Empresarial de Capitales SA de CV, has been consistently making large-scale stock purchases, drawing attention from market observers. PBF Energy is a petroleum refining and logistics company operating six refineries across the United States with a combined processing capacity of approximately 1 million barrels per day. With a high Nelson Complexity Index of 13.2, the company has the capability to process various crude oils, but has recently struggled due to declining refining margins and weakened demand. The stock price started at around $44 in early June 2024 and has been on a consistent downward trajectory, recently falling to around $15. The decline accelerated particularly after October 2024, with more dramatic drops in March and April 2025. This stock performance aligns with the company's financial results. PBF Energy reported larger-than-expected quarterly losses in August and October 2024, and again in February 2025, with refining margins plummeting to $6.79 per barrel, a 69.4% decrease compared to 2023. In contrast, Control Empresarial de Capitales SA de CV has consistently purchased shares throughout this decline. From June 2024 to April 2025, the entity conducted large-scale purchases nearly every month, notably increasing the volume whenever the stock price fell. In June 2024 alone, it purchased approximately $209 million worth of shares, followed by about $145 million in September 2024, and even during the significant price drops in February and March 2025, it invested $10.8 million and $8.9 million respectively. This persistent buying suggests that Control Empresarial de Capitales believes in PBF Energy's long-term value and recovery potential. However, despite this optimistic signal, the company continues to face serious operational challenges. Notably, the fire at the Martinez refinery on February 1, 2025, dealt a significant blow to the company. The repair costs are estimated at approximately $30 million, and the fire-damaged units are not expected to restart operations until the fourth quarter of 2025. Additionally, the refinery is currently operating at 76% capacity, limiting its production capability. External factors are also adversely affecting PBF Energy. Changes in U.S. tariff policies could increase the cost of heavy crude imported from Canada and Mexico, while restrictions on Venezuelan crude oil imports could impact the company's feedstock procurement. PBF Energy is a major buyer of Venezuelan crude, accounting for about 14% of U.S. imports. In this environment, Wall Street analysts continue to downgrade their outlook for PBF Energy. BMO Capital Markets lowered its price target from $42 to $35 in October, and other investment banks like JP Morgan and Piper Sandler have made similar moves. The current consensus rating is 'hold' with a median price target of $34.50, which is still above the current stock price. For investors, these contrasting signals can be confusing. On one hand, the major shareholder's consistent purchases suggest a value investment opportunity, but on the other hand, the deteriorating industry environment and company-specific operational issues limit the prospects for near-term recovery. Ultimately, investment decisions regarding PBF Energy will depend on investors' views on the long-term outlook for the refining industry and their assessment of the company's ability to resolve its operational issues. Control Empresarial de Capitales' persistent buying can be seen as a sign of long-term confidence, but investors should also consider the possibility of further stock price declines and the time it may take for recovery. The upcoming quarterly earnings report and the progress of the Martinez refinery restoration will be crucial indicators for determining the future direction.

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