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Why David Shaw is Bullish on Delek US Holdings, Inc. (DK)

David E. Shaw‘s hedge fund, D. E. Shaw, has raised its passive stake in Delek US Holdings, Inc. (NYSE:DK) to 5.4% of the company from 5.0% held earlier. In a new filing with the Securities and Exchange Commission, D. E. Shaw reported ownership of 3.28 million shares of Delek US, versus 3.04 million disclosed earlier.

David E. Shaw Vertex Pharmaceutical

Mr. Shaw raised his fund’s exposure to Delek US Holdings several days before the company declared a special dividend of $0.10 per share that will be paid on October 30. However, the investor has been bullish on the company for quite a long time. D.E. Shaw first disclosed a stake in Delek US in its 13F filing for the end of 2012, holding around 129,500 shares. Since then, Mr. Shaw has been constantly buying shares, bringing his fund’s stake to over 5% of Delek US Holdings, Inc. (NYSE:DK).

In addition, Mr. Shaw is not the only investor that likes this $1.9 billion petroleum refining company. Billionaire Steven Cohen, added Delek to the equity portfolio of his new fund, Point72 Asset Management, and owns over 3.04 million shares as of the end of June. Israel Englander‘s Millennium Management holds 2.48 million shares, according to its latest 13F filing, up by 294% on the quarter. And many other investors, among those that we track, have raised their exposure to Delek US Holdings, Inc. (NYSE:DK).

From a financial point of view, these investors might be right in buying shares of Delek US Holdings, Inc. (NYSE:DK). The company reported an increase in revenue and earnings over the last several quarters. The revenue amounted to $2.37 billion in the second quater, versus $2.25 a year ago. The EBITDA went up to $134 million, from $106 million in the second quarter of 2013. The company also posted an EPS of $0.92, versus $0.78 a year ago.

Moreover, Delek trails a P/E of 24.40, which is above the industry average of 18.70, while its forward P/E amounts to 11.30. Among the analysts opinion, the consensus recommendation for Delek US Holdings, Inc. (NYSE:DK) stands at ‘Overweight’ with the average target price reaching $42.70, which makes the company a good bargain at the current price.

D.E. Shaw is one of the largest hedge funds, with around $67 billion in Assets Under Management. Mr. Shaw is one of the most talented managers on the Street known for solid returns over the years, his fund returning around 13% on an annualized basis over the last 20 years.

Disclosure: none

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