Description

This is a quick Trump is our next POTUS trade idea, which will inevitably get low ratings, but that I think will earn a decent IRR:

Short Casey's General Stores because 10-15% of their EBT is tied to a poorly thought out Renewable Identification Number (RIN) trading system, erected by the EPA, that will likely be reformed under a Trump administration.  Icahn has been a vocal opponent of the current RIN system (see: https://www.dropbox.com/s/emugyp2g9o7hkr1/Icahn%20EPA%20letter%20re%20RINs.pdf?dl=0).  Read any independent refinery's conference calls to hear constant bemoaning from CEOs.

Analysts have the company growing earnings up and to the right.  That might prove difficult should the RIN windfall go away.  Stock trades for 17.2x FY19 Adj EPS.

Today (for those reading in the future, the day after Trump's surprise victory), independent refineries rallied (CVI/HFC up 24%/16% respectively) and MUSA was off by 6%.  CASY was up 34bps.

Also, we're far off from autonomous driving, but as ride sharing services continue to grow, is it crazy to think the US is oversupplied with C-Stores?  As Electric Vehicles gain share and fuel efficiency rules become more stringent for combustible engines, is it crazy to think retail fuel distribution volumes will be under pressure over the medium term?

Catalyst

Murca becomes great again.