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Strategies & Market Trends : Value Investing

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The_Commodore

To: The_Commodore who wrote (66796)	3/4/2021 8:43:43 PM
From: Elroy	2 Recommendations of 78816

If fertilizer prices were similarly high in 2018, then why didn't UAN make a profit? based on the chart UAN fertilizer prices were above $200/ton for about 5 months of 2018. Now the same fertilizer is about $275/ton. In 2018 UAN did pay a distribution. $4.00 to be precise. We don’t care about net income for distributions - we care about an internal UAN algorithm for distributable cash flow. If Fertilizer prices stay where they are now, I think it’s pretty easy for UAN to pay $8.00 per share in distributions in 2021 (more actually), which may result in a $50 share price. It’s just a matter of fertilizer prices staying up where they are, and management wanting to distribute cash rather than doing something else with th3 3xvess cash flow that will be produced by the higher revenues. And the share price is similar to now Exactly. In 2018 UAN fertilizer was $200 for five months, and UAN share price was about where it is now. In 2021 it seems UAN fertilizer is hanging around $270, and UAN’s share price is trading as if the fertilizer price was only $200. It’s too cheap.

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