Ariana Research
Long/short equity, deep value, special situations

Murphy USA: Follow The Spin-Offs

Executive Summary

Murphy USA, Inc. (NYSE:MUSA) ("Murphy", "MUSA" or the "Company") is a leading convenience store/gas station operation with 5% of the United States market. The Company has a market cap of ~$1.7B and an enterprise value of $2.3B. In 2012, the Company derived 96.7% of revenues from its convenience store/marketing segment, and 3.3% from its ethanol segment.

According to an interview with Mohnish Pabrai, Mr. Pabrai mentioned that Charlie Munger once told him to (1) focus on the cannibals, aka companies which are buying back massive amounts of their shares; (2) follow spin-offs and (3) copy/ follow the great investors. Murphy clearly fits the second category as the market is offering a highly mispriced security as Murphy

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