Recent Buy – VLO

Right out of the gates with the new month, I added to my Valero position.  It wasn’t an average down scenario, but rather a reaction to geopolitical events.  Since May the stock has been on an upward trend.  At month end it dropped to $66.69 – which I missed, but  wound up adding on August 1st at $69.64 which locks in a yield of 4.02% on my new shares.  By adding prior to the record date, they are also eligible for the September dividend.

The news cycle last week was on the Venezuela election – or notably any US reaction (sanctions) to it.  The reason for my hesitation in purchasing was to understand the impact of possible oil import sanctions on Gulf Coast refineries.  It turns out only one of Valero’s refineries has significant exposure to oil from Venezuela, basically on par with Phillips 66 (PSX).  Subsequently – contrary to Trump’s earlier pronouncements – the actual response has been relatively muted thus far.  Perhaps the administration recognizes potential impacts to the economy (refinery jobs in Trumpland or higher gas prices nationally) with a more bombastic approach.  The day following my purchase, VLO announced an agreement to export refined fuels to Mexico through iEnova (SRE subsidiary) with an option to attain 50% stake in storage facilities in Vera Cruz, Mexico City and Puebla.

Last week The Dividend Guy also published an an analysis on Seeking Alpha that reinforced my conclusions – albeit via differing metrics.  Although in concurrence with his findings, I would add that Valero also spawned Nustar Energy (NS – 2006) in addition to his mention of CST (now ANCTF) and Valero Partners (VLP).

Therein lies my rationale for my first August purchase.

Conspiracy Theories

Two of the investing kingpins are in the news this week for different reasons.  Warren, obviously, for his annual meeting.  Carl, on the other hand, stole some of the thunder with his announcement yesterday that he exited his Apple position.  I’ll get back to Warren in a minute, but over the years have come to realize that rarely is a given act random.  Most times it’s calculated, particularly when significant amounts of money are at stake.  So I look for the hidden agenda, or for lack of a better term, the Conspiracy Theory.

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