CVI

Defying Losses: Billionaire Carl Icahn Pours Another $18 Million Into CVR Energy ($CVI) During April

05/01/2025 21:49

Shares of refining company CVR Energy ($CVI) have experienced significant decline over the past six months, yet billionaire investor Carl Icahn continues to purchase stock, drawing market attention. Icahn has demonstrated a pattern of buying since early this year, with particularly concentrated purchases throughout April. Most recently, on April 29, he acquired 7,907 shares for approximately $144,000. This represents part of a massive April buying spree totaling roughly 1 million shares worth about $18 million. Headquartered in Sugar Land, Texas, CVR Energy primarily operates refining and nitrogen fertilizer businesses in the Midwest. The company owns refineries in Kansas and Oklahoma and has recently been diversifying into renewable energy. However, the company's financial situation remains challenging. According to Q1 2025 results announced on April 28, CVR Energy reported a loss of $0.38 per share, with revenue declining 11.6% year-over-year to $1.65 billion. This performance contrasts sharply with earnings of $0.04 per share during the same period last year. The company's stock experienced a dramatic decline in late October 2024. Following the announcement of third-quarter results on October 29, 2024, the share price plummeted 24.4% in a single day, subsequently trading in the $17-19 range through December. This represents a substantial drop from the $24-27 range where it traded until mid-July of the same year. What's noteworthy is that despite these financial difficulties and stock price declines, Carl Icahn has consistently continued purchasing shares. On January 8, 2025, he acquired 878,212 shares for approximately $16 million and maintained steady buying throughout February and March. Overall, Icahn has purchased an estimated 3 million shares worth over $50 million in CVR Energy stock this year. Additionally, in November 2024, Icahn Enterprises announced plans to increase its stake in CVR Energy. According to reports at the time, Icahn planned to purchase 15 million shares at $17.50 each, increasing his ownership to 81.3%. This large-scale buying activity comes despite structural challenges facing the refining industry. In July 2024, JP Morgan lowered price targets for U.S. refiners due to weakening refining margins, setting CVR Energy's target price at $26. The company has also faced operational issues. On January 24, 2025, its Coffeyville refinery in Kansas entered planned maintenance following a fire. This refinery has a processing capacity of 132,000 barrels per day and primarily produces transportation fuels such as gasoline, diesel, and propane. Industry experts offer varying perspectives on Icahn's continued purchases. Some interpret this as confidence in the company's long-term value, while others view it as a strategic move to lower his average purchase price. Icahn has also been eyeing other market opportunities. Last year, CVR Energy participated in the auction for Citgo Petroleum shares, though Elliott affiliate Amber Energy ultimately won with a $7.3 billion bid. Nevertheless, diversification into nitrogen fertilizer business and renewable energy may signal future growth potential for the company. In July last year, CVR Energy CEO David Lamp expressed interest in diversifying beyond the Midwest refining market, supported by Icahn's investment. Investors might view Icahn's persistent buying as a strong signal about the company's intrinsic value, but caution is warranted given current financial difficulties and structural challenges in the refining industry. Analysts currently maintain an average "hold" rating on CVR Energy, with a median price target of $19. Ultimately, while Icahn's insider buying activity is certainly a positive signal, sustainable stock recovery may be difficult without fundamental improvement in the company's financial situation. Upcoming second-quarter results and potential improvements in refining margins will likely serve as important indicators for future stock direction.

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