The parent company of SuperAmerica saw a modest first-day gain on Wall Street on Thursday after its initial public offering priced far below expectations late Wednesday.
Limited partnership units for Northern Tier Energy rose 16 cents, or 1.1 percent, to $14.16, on a day when U.S. stocks rallied on positive economic reports and news about Europe's currency crisis.
In a weak opening, units initially fetched just $14 -- far short of $19 to $21 range the company expected. During early trading, units dropped to as low as $13, but later recovered.
Nicholas Einhorn, an analyst for Renaissance Capital, said limited partnership units seldom result in big first-day swings because investors tend to be seeking stable dividends over longer time frames.
He attributed Northern Tier's less-than-expected opening price to investor concern that its business -- refining and convenience retail -- will be more volatile than that of other energy-related limited partnerships, such as pipelines and oil wells.
"Investors prefer those partnerships that have a much more stable business and where they are getting steady and predictable income," said Einhorn, whose firm specializes in IPO research for hedge funds and other clients.
Master limited partnerships are common in the oil, gas and pipeline industries. One attraction is that the gains flowing to limited partners are not subject to the federal corporate income tax.
Northern Tier Energy is based in Ridgefield, Conn., and is controlled by affiliates of two private equity firms, ACON and TPG. It has 166 company-operated and 67 franchised SuperAmerica stores, and owns the St. Paul Park oil refinery and a 17 percent stake in a Minnesota oil pipeline serving the refinery. All were acquired from Marathon Oil Corp. in December 2010.
At the opening price of $14, the 16.2 million units brought in $227 million, compared with $325 million the company had expected at the midpoint of the range. In Thursday's trading, more than 8.3 million units changed hands.
The company has said the IPO proceeds will help pay off the acquisition, reduce debt and cover recent losses. It has said it plans to invest in refining and other operations, and to make acquisitions.
A company spokeswoman had no comment Thursday, citing a continuing quiet period related to the offering.
David Shaffer 612-673-7090