Everyone's favorite billionaire investor, Warren Buffett, continues to pour billions into oil refinerPhillips 66 (NYSE:PSX). At last count, Buffett's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) owned over 75 million shares of Phillips 66, which was part ofConocoPhillips as recently as 2012. Buffett initiated that stake -- currently valued at some $5.6 billion -- probably because he concluded that Phillips 66 was an efficient operation in a vital industry. As icing on the cake, refiners' margins often expand as crude oil prices fall, which has made this a nice business to be in over the past 18 months.

IMAGE SOURCE: GETTY IMAGES.

But Phillips 66 isn't the only fish in the sea. In fact, thanks to the constraints that Buffett's huge cash hoard places on his investment options, Investors like us have the opportunity to buy into an arguably superior refining stock that he can't:Western Refining (NYSE:WNR). Here's why.

Brief history

Western Refining has been through its fair share of trials since becoming a publicly traded company 10 years ago, and these difficulties have forged an exceptional operation.

Although a good deal smaller than Phillips 66, Western Refining runs an exceptional business -- and that's in spite of its acquisition of Giant Industries a decade ago, which left the company with a staggeringly high debt-to-capital ratio of 67% by the end of 2007. The purchase severely hampered Western Refining in the years following the acquisition. Today, however, the company operates some of the most profitable refineries in the U.S., with most located in Texas, New Mexico, and Minnesota. The products of these refineries are then sold through Western Refining's marketing distribution network.

Refining profits

To fully appreciate just how great an operation Western Refining has become, we need only compare it with Buffett's favorite, Phillips 66. The numbers speak for themselves.

WNR Return on Equity (TTM) data by YCharts

Western Refining has come a long way over the past 10 years -- particularly regarding its debt balances. True, it's slightly more leveraged than its much larger cousin, Phillips 66, but its higher returns on capital employed more than makes up for it.

Intrigued? The situation gets even better as we move on to the market's current valuation of these enterprises.

Buffett wishes he could buy Western Refining

Western Refining's market capitalization currently sits at around $1.75 billion. That's much too small for Buffett's taste -- unless he wanted to buy the whole thing, which is obviously an option. Phillips 66, on the other hand, sits at the other end of the spectrum with a market capitalization of $39 billion. Buffett needs investments that are big enough to move the needle, and Western Refining doesn't meet that criterion.

For Berkshire's sake, it truly is a pity. Just look at Phillips 66:

DATA SOURCE: S&P CAPITAL IQAnd compare it with Western Refining:

SOURCE: S&P CAPITAL IQ

These are just a few metrics, but the winner is clear. Even better, Western Refining's dividend is backed by spectacular free cash flow generation, which came in at $552 million last year and more than covered total dividend payments of $129.2 million.

Foolish final thoughts

Long gone are the days when Buffett could trounce the market by 20% a year -- he's become a victim of his own success. In comparing Berkshire holding Phillips 66 with Western Refining, we find a prime example of this dynamic in play. Western Refining has a lower valuation and higher return on capital than Phillips, but it's just too small to make any difference for Berkshire Hathaway. The average Foolish investor doesn't suffer from the "problem" of having tens of billions of dollars to invest, and that makes Western Refining a fantastic buy today -- one we can take advantage of that Buffett can't.

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