How I learned to love Caltex

Everyone knows Caltex is a lousy business. Refineries are notorious for being capital pigs. They take enormous amounts of shareholder’s cash, invest it at low rates of return and inevitably come back to the market to do it all again. If there is an enemy of the intelligent investor, surely this is it.It takes just a glance at the company’s profit to confirm its mediocrity. Margins are low and variable; profits swing wildly and capital raisings are common. Yet for the past year, Caltex has sat on our buy list, it is in our Growth portfolio and we’ve mentioned it...

Everyone knows Caltex is a lousy business. Refineries are notorious for being capital pigs. They take enormous amounts of shareholder’s cash, invest it at low rates of return and inevitably come back to the market to do it all again. If there is an enemy of the intelligent investor, surely this is it.

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