Smart Money Already Liked This Hot Refiner, And Now It’s Growing

Hedge funds have been bullish on PBF Energy Inc (NYSE:PBF). Of the around 730 elite funds we track, 32 funds owned $844.07 million of the company’s shares representing 31.10% of the float on June 30, versus 27 funds and $900.23 million respectively on March 31. Seth Klarman‘s Baupost Group increased its position by 28% to 11.03 million shares while D E Shaw, which is bullish on several refiners, upped its stake by 31% to 5.46 million shares. Glenn Russell Dubin’s Highbridge Capital Management increased its holdings by 8% to 403,268 shares.

Analysts are divided on PBF Energy. Two analysts have a ‘Strong Buy’ rating, four have a ‘Buy’ rating, two have a ‘Sell’ rating, and two have a ‘Hold’ rating. Earlier this month, Goldman Sachs initiated coverage with a ‘Neutral’ rating and a $32 price target. In August, Barclays rated the refiner ‘Underweight’, but boosted its price target to $32 from $30. Macquarie has an ‘Outperform’ rating with a $40 price target. Overall, analysts have a consensus price target of $36.22 per share, giving shares an upside of 28.31% from current levels.

Based on current metrics, shares of PBF Energy Inc (NYSE:PBF) are cheaper than that of Valero or Phillips 66. PBF Energy trades at a forward P/E of 6.64 versus Valero’s forward P/E of 8.89 and Phillips 66’s forward P/E of 11. Shares of PBF Energy also pay a dividend yield of 4.25%. If shale production in the U.S continues to weaken refinery input prices, and global economic activity remains above sea-level, PBF’s stock will do well. PBF Energy’s refinery capacity will increase by 60% this year because of M&A and could increase further as the company expands.

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