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Strategies & Market Trends : Value Investing

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From: Elroy	2/23/2021 9:11:22 PM
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I’m away from home, but I read the UAN conference call, and 5hey made a few comment# which were unappealing to me. The additional $10m share repurchase comes out of cash flow available for distribution. So if they but a million $ of shares, it’s a million bucks less they distribute that Q. They presell a lot, so the full impact of recent fertilizer price increases won’t be seen until Q2. When they refinance the debt, they may leave a stub of high interest debt outstanding with the plan to buy it back in the open market. This repurchase also likely reduces cash available for distribution. They expect to receive some tax credits for some carbon reduction related programs. This savings will be used to reduce debt, so their priority is not distributions. The fundamental story remains very good driven by stron* farm economics and low fertilizer supply, but management doesn’t sound very driven to increase the level of distributions. In theory the capital structure isn’t supposed to be the driver of the unit price,but I’d rather have them remain with a very high debt load and distribute as much cash as possible. I want da money.

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