HollyFrontier: Get A Massive 20%+ Of Your Capital Returned Despite The Rough End To 2021

Summary

• After seeing a recovery during 2021, disappointingly HollyFrontier saw a rough end to the year.
• Their operating cash flow was negative during the fourth quarter of 2021 due to higher maintenance and weather-related downtime, which was amplified by a large working capital build.
• Management is still sticking to their plan of returning $1b to shareholders starting soon, which is tantamount to seeing a massive 20%+ of your capital returned.
• This may prove a struggle to fund without the use of debt, and given their already high leverage, this will need to be closely monitored but at least their liquidity remains strong.
• I am maintaining my buy rating but I hope that management walks back these massive shareholder returns if the operating conditions of 2022 deteriorate.

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Introduction

After HollyFrontier (HFC) suspended their dividends during the first half of 2021, the end of the year saw the countdown start to seeing their dividends reinstated, as my previous article discussed. Now that their

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.