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Strategies & Market Trends : Value Investing
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To: E_K_S who wrote (52828)11/19/2013 11:10:55 AM
From: LTBH2 Recommendations

Recommended By
E_K_S
Spekulatius

  Read Replies (3) of 78648
 
My biggest concern for this holding has nothing to do with the company itself but rather the raider who bought into the parent awhile ago. Unfortunately the memory fog of old age overcomes me more frequently than I would wish so although I believe it was Ichan, I cannot swear to it.

EDIT: see link at end, memory didn't fail, was Ichan

Raiders either greenmail or sell off the parts. Neither generally good for long term holders of the company.

UAN does use pet coke as a feed stock which in times of high NG prices gives it a price advantage although I believe ATM its crossed over and a slight negative. Should one believe in the Marcellus supply that is coming online near term and in the future, this again would be a competitive issue IMO.

In the short term, by far the bigger concern for me is it receives ~70% of it feedstock from its parent IIRC.
So if anything disrupts this relationship, as in selling off pieces, then UAN's business model is one big upset applecart.

The other ~30% feedstock is contracted out, and to the best of my knowledge, no one ... parent or others are paying UAN to remove/use their pet coke.

For me, UAN's future is very unclear. I do believe this board is oriented towards the trader which I am NOT so you may find an investable value where I find a short term visibility/viability issue WRT to Ichan's plans (and their effects on UAN) and long term competitive issues on higher feedstock costs versus NG.

I cannot help you on the financials since I'm just not very good with the bookkeeping stuff.

The very best last PERSONAL indicator I can provide is that although I have been toying with doubling my position (to a 1/3 position) and significantly lowering my average purchase cost .... I have yet to convince myself this is a wise and intelligent move.

Luck
LTBH

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