CVI

Carl Icahn Pours $61 Million Into CVR Energy ($CVI) Amidst 45% Stock Plunge

04/24/2025 01:17

Carl Icahn's substantial share purchases in CVR Energy ($CVI) since early 2025 have caught Wall Street's attention. The billionaire investor has poured over $61 million into the stock over the past four months, signaling strong confidence in the company's future despite its sharp decline in late 2024. $CVI shares plummeted more than 33% in just three days, from $23.82 to $15.90 in late October last year following disappointing quarterly results. Currently trading at $17.88 (as of April 23, 2025), the stock has fallen approximately 45% year-over-year, in stark contrast to the S&P 500's 6.02% gain during the same period. Despite this weakness, Icahn has maintained a consistent buying pattern. Beginning with 878,212 shares ($16,027,369) on January 8, 2025, he ramped up purchases in late February and has been buying almost daily since. From early March through mid-April, he executed over 20 consecutive transactions totaling approximately $45 million, mostly at prices between $16-18 per share. These purchases were executed pursuant to a Rule 10b5-1 trading plan adopted on February 21, 2025, reflecting a long-term investment strategy. CVR Energy, headquartered in Sugar Land, Texas, operates primarily in the oil refining and nitrogen fertilizer manufacturing sectors, with refineries in Kansas and Oklahoma. The company is structured into three main segments: petroleum, renewables, and nitrogen fertilizer, with transportation fuel refining and marketing as its core business. In January 2025, a fire occurred at the company's Coffeyville refinery, damaging the naphtha hydrotreater. The facility subsequently began planned turnaround work. With a daily processing capacity of 132,000 barrels, this refinery primarily produces transportation fuels including gasoline, diesel, and propane. Financially, CVR Energy has faced challenges. For fiscal year 2024, the company reported revenues of $7.61 billion, down 18% year-over-year, with net income of just $7 million. In Q4 2024, while revenues reached $1.95 billion, the company reported a loss of $0.13 per share, significantly missing analyst expectations of -$0.01. Analysts anticipate continued difficulties in Q1 2025, projecting a loss of $0.90 per share and revenues of $1.62 billion, a 13.1% decrease compared to the same period last year. The current P/E ratio of 298.00 suggests a high valuation relative to earnings performance. Nonetheless, Icahn's persistent investment is noteworthy. In November 2024, his company, Icahn Enterprises, announced a proposal to increase its stake in CVR Energy to 81.3% by purchasing 15 million shares at $17.50 each. Icahn already holds approximately 70% of CVR Energy through Icahn Enterprises. Icahn's moves suggest he's betting on long-term value rather than short-term performance. Notably, in July 2024, reports indicated that CVR Energy participated in the auction for Citgo Petroleum with an all-cash offer of approximately $8 billion. This was seen as part of the company's efforts to expand its refining operations beyond the mid-continent region. In a July 2024 interview, CVR's CEO David Lamp stated, "We continue to explore strategic transactions in refining and are interested in diversifying beyond the mid-continent oil refining market," a strategy supported by Icahn's investments. Energy sector experts generally maintain cautious outlooks for oil refining in 2025 due to weakening refining margins and forecasts of supply surplus. Last July, JP Morgan lowered price targets across U.S. refiners citing weaker refining cracks, setting CVR Energy's target at $26. However, the consistent buying from a veteran investor like Icahn may signal that the currently depressed share price offers a long-term buying opportunity. Such substantial insider investment during a period of high energy price volatility suggests potential value that the market may be overlooking. The upcoming Q1 2025 earnings report, scheduled for April 28, will be a crucial indicator of the company's short-term direction. Investors should pay attention not only to the financial figures but also to management's commentary on strategic direction and operational efficiency improvements.

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