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Strategies & Market Trends : Dividend investing for retirement
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To: Elroy who wrote (27570)7/5/2017 11:12:51 PM
From: E_K_S1 Recommendation

Recommended By
Elroy

  Read Replies (1) of 34328
 
Re: UAN

This is a commodity play (ie fertilizer) and is/has been in a bottom formation hitting 5 year lows. I am buying shares then selling my high priced shares after 31 days so I can get my average cost lower and harvest some losses. My goal is to well positioned w/ low cost shares (based on my avg price) by the end of 2017. I have 1 or 2 more Buy/Sell to accomplish this. For me it's no rush but I just want to preserve my large share count.

UAN will eventually turn when commodity prices turn including Corn & soybeans. The good part (and typical of every commodity boom/bust cycle) the longer the down cycle, the longer the up cycle will be. When this turns (just watch the SMA(200) weekly, it s/d last for several quarters if not years (maybe 5 years).

I like the diversification buying out of favor down ridden sector but w/ a company that has excellent assets.

The company is selling at 65% of BV (BV=$5.40/share) and still able to make money w/ ammonia & UAN prices at all time lows. Not much money but they are paying the bills (including paying down debt).

If/when fertilizer prices return to 2011 levels (reversion to the mean), the company will be printing money and I expect the share price to be in the $19-$22 price range if not higher. We may not see that until 2020 but as fertilizer prices increase, their dividend distribution will rise (they pay a variable dividend).

I like to have several "value" special situation plays in the portfolio w/ an 18-24 month payoff window. This one may take 36 months but Carl Icahn will not let this go away. He is the largest shareholder of the parent company CVR and he understands the nature of cyclical industries.

Hope that helps

Good Investing

EKS
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