D.E. Shaw & Co. Just Bought More Shares of Western Refining Inc. (WNR)

RBC Capital Markets, a Canadian investment bank, has recently initiated coverage of Western Refining and provided a brief overview on the future outlook of the crude oil refiner. The analyst set a ‘Sector Perform’ rating with a price target of $48 and said that Western Refining owns and operates an exceptional asset portfolio, which includes two of the most advantaged refineries in the United States. However, the independent crude oil refiner is on the horns of a dilemma: to purchase the remaining 62% of Northern Tier Energy or to sell its refineries to Northern Tier Energy. According to the analyst at RBC, the uncertainty around the Northern Tier Energy deal might hold back the company’s expansion and growth in the medium term.

Just yesterday, Western Refineries reported its financial results for the second quarter of 2015. The independent crude oil refiner posted net income, excluding special items, of $138 million or $1.44 per diluted share, compared to $128.8 million or $1.29 per diluted share reported a year ago. Meanwhile, the company reported net sales of $2.83 billion for the quarter, significantly lower than $4.35 billion a year earlier.

Considering the fact that oil prices are unlikely to recover soon as Saudi Arabia boosts its refining activities, Western Refining can gradually enhance its margins. Therefore, it is highly probable that the stock will have a relatively stable performance over the short- to medium-term. From the pool of over 700 hedge funds that we track, Jim Simons’ Renaissance Technologies is among the largest shareholders in Western Refining Inc. (NYSE:WNR) with an ownership stake of 1.64 million shares as of the end of March.

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