Postcards: This Insider Just Made a Big Bet on a Republic Favorite

Mexico's richest man is buying a refinery that earned him nearly $300 million in 2022. He's back on this deeply undervalued U.S. energy name.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: This Insider Just Made a Big Bet on a Republic Favorite]( Mexico's richest man is buying a refinery that earned him nearly $300 million in 2022. He's back on this deeply undervalued U.S. energy name. [Garrett {NAME}]( Jan 19   [READ IN APP](   Market Update: We’re nearly back to neutral again, thanks to a big rally today in Apple (AAPL). So goes Apple, and so goes the market. The stock got a nice pop from speculation around Artificial Intelligence. If this market recovers, it’s got a clear path to $200. I’d rather own pure momentum stocks like Microsoft (MSFT), as I think the stock is heading to $500 by 2026. Something occurred today at around 2 pm that saw a significant amount of institutional buying. We’ll digest this over the next 24 hours as we’re heading into Third Friday, the day that most options volume happens each month. Dear Fellow Expat: If you lift anchors in the Florida Republic and head southwest, you’ll eventually crash into the eastern seaboard of Mexico. I recommend Tampico - as it will remind you quickly of New Orleans due to the French influence. It’s the place where Spain’s influence over Mexico collapsed in 1829 at the Battle of Tampico. And it’s the subject of a great Jimmy Buffett song, “Tampico Trauma.” Spend enough time South of the Border - and your conversations will eventually filter to the nation’s wealthiest man: Carlos Slim. Slim made a fortune in the 1990s in the telecommunications industry, a move that reshaped the digital fabric of Latin America. This pivotal moment, marked by his acquisition of Telmex in the early 1990s, wasn't just a business transaction—it was a gambit that catapulted Slim from a successful businessman to a global tycoon. He currently has a net worth of $100 billion and regularly draws comparisons to Warren Buffett for his industry prowess and patient approach. Here in the Florida Republic, we’ve successfully captured wins around Buffett’s continued buying of oil giant Occidental Petroleum (OXY). But now - we’re ready to do the same with Carlos Slim, who recently made a sizeable purchase in a stock that anchors our Republic Risk Portfolio - something I promise to rename when the lightning strikes an idea. Let’s dig into Slim’s PBF Energy (PBF) purchase and show why we love this stock over the next 18 to 24 months. [Upgrade to paid]( Slim Gets Fat on PBF In 2020, Carlos Slim bought roughly $60 million in PBF Energy stock. Two years later, he sold that stake for $358 million. [That’s almost 600%]( in gains. Now, two years later, he’s back into the stock. And for good reason. PBF Energy is an American petroleum refining and marketing company. Founded in 2008, it has quickly established itself as a significant player in the oil industry. PBF Energy operates refineries across the United States in California, Delaware, New Jersey, Ohio, and Louisiana. These refineries have a combined processing capacity of several hundred thousand barrels of crude oil per day, making PBF Energy one of the largest independent refiners in North America. This week, Slim bought $53.7 million in PBF stock, according to this SEC Form 4 document. secform4.com Refining isn’t popular among the political class. But intelligent investors like Slim aren’t worried about the optics. The U.S. supply chains operate on gasoline and diesel fuel. As the EV world collapses (and companies like Hertz ditch EVs for gas-powered vehicles), the refinery business remains VERY attractive. Now, we’ve discussed the beauty of trading refineries like Valero (VLO) and Phillips 66 (PSX) when our energy signal turns positive. But PBF is a different animal, a beaten-down energy name with incredible fundamentals. PBF has an F score of 6, barely at the line where we start eyeing reversion momentum candidates. But the rest of the numbers are remarkable. It’s trading at 77% of tangible book value… Why do we like stocks trading under their tangible book value? Because that’s less than the sum of their parts, Tim regularly talks about this in the banking space, but I focus on it in the energy space because the value of their assets is higher than the value of the available equity. If this company sold all its assets tomorrow at par, shares would be worth considerably more. It has an EV-EBIT of just 1.71x. That’s all the available capital in the corporate structure, [the subject of the book I highlighted]( a few months ago by Toby Carlisle. It has a price-to-earnings ratio of under 2, and its price-to-Graham number is a paltry 0.26x. This company has a Return on Invested Capital north of 27%, proving its capital efficiency. And it has very few debt issues, with a Z score of 4.26x, that critical financial solvency score that [Tim brings up every Thanksgiving](. We’re seeking these metrics from a strong breakout candidate over the next 24 months - and the stock is a member of our [Republic Risk Portfolio.]( We look at this stock with open eyes and full hearts because the downside is limited. Still, the upside is substantial, especially if global oil demand rebounds and supply challenges dominate the landscape. The average price target of PBF among Wall Street analysts is $51.00 per share, or 21% higher than today’s closing price. Shares are down from September highs of around $54.00 when [the Oil Counter-Narrative kicked in](. We anticipate another leg up, especially as geopolitical tensions continue to impact the global oil markets, and we expect higher oil prices in the next 24 to 30 months. We are long PBF in the Republic Risk Portfolio. We’re heavily tapped into the strong metrics behind the global shipping industry with a wealth of names that we expect will catch momentum as the year progresses. Stay positive, Garrett {NAME} Secretary of State Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.   [Like]( [Comment]( [Restack](   © 2024 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()