Editors Note: Featured tickers: CST Brands Inc (NYSE:CST), Valero Energy Corporation (NYSE:VLO), Phillips 66 (NYSE:PSX), ConocoPhillips (NYSE:COP), Marathon Petroleum Corp (NYSE:MPC), Marathon Oil Corporation (NYSE:MRO)
Scout Capital is a hedge fund managed by Adam Weiss and James Crichton, with around three billion US dollars in assets under management. The firm has reported annualized returns of 15.5%, since August 1999. In accordance with securities regulations, the fund recently filed a 13G form disclosing a major buy in the fund’s equity portfolio. Discover why we follow hedge fund sentiment.
Big Buy in Valero spinoff CST Brands
The 13G discloses that the fund initiated a position of 4,485,000 shares in the energy retailer CST Brands Inc (NYSE:CST). CST started trading as recently as May 1, and is a spinoff from Valero Energy Corporation (NYSE:VLO). The company has over 1,000 retail locations throughout the U. S., as well as 848 retail stores in Canada. These store trade under the names Corner Store and Depanneur du Coin Gas and Convenience stores. The company also supplies products to 4,000 other retail locations.
The company will be included in the S&P Midcap 400 Index Sub Industry Automotive Retail index, and is the second largest North American independent retailer of food and convenience stores. The significant retail assets combined with the fact that the CST Brands Inc (NYSE:CST) business generated $13 billion in revenue last year when it was part of Valero, has made a favourable impression on some analysts.
Furthermore there is a history of spin-offs displaying impressive price action in the market. An example of this is Phillips 66 (NYSE:PSX), a spin-off of ConocoPhillips (NYSE:COP), which has risen 90% over the past year. Marathon Petroleum Corp (NYSE:MPC), a spinoff of Marathon Oil Corporation (NYSE:MRO), has risen around 88% in the past year. CST Brands Inc (NYSE:CST) has reflected this trend so far, trading up from about $28 as of listing to $31.99 as of writing.