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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: MNTNH who wrote (52857)	11/23/2013 2:01:39 PM
From: E_K_S	Respond to of 78652

Hi MNTNH Welcome to the SI Value thread where we seek out undervalued companies that can/or will present a value opportunity now or in the future. Re: CVR Partners, LP (UAN) -NYSE AgJunction Inc. (AJXGF) Yara International ASA (OTC Markets: YARIY) (Aerial photo provided by Coffeyville Resources) The initial build of the nitrogen fertilizer plant included shipping an existing gasification plant to Coffeyville piece by piece from the West Coast. A Texaco coal gasification plant, originally located in Cool Water, Calif., was disassembled, refurbished and its technology converted to be able to gasify petroleum coke instead of coal. It was then reassembled to form the heart of our nitrogen fertilizer operations. The plant, which is only fertilizer plant in North America that uses petroleum coke as opposed to natural gas as a feedstock, first began production in late 2000. In 2012, Coffeyville Resources Nitrogen Fertilizers produced 124,600 tons of ammonia available for sale, and also produced 643,800 tons of UAN. I stumbled into UAN after seeing Carl Ichan's interest in it's parent CVR Energy, Inc. (CVI). I am still studying the company and in particular their technology for converting pet coke into nitrogen fertilizer. If their processing technology is more than a large capital intensive investment to process it's parent's pet coke "waste" but rather provides some type of patented and/or proprietary process, I see their processing technology when utilized throughout the industry as an undervalued intellectual asset. There have been several recent articles and news events where pet coke is considered a toxic waste. With the recent addition of refining the Canadian Oil Sands (rich in tar) processing this crude generates more per unit pet coke than lighter crude, I see it only getting worse and UAN has a viable solution to get rid of this waste stream. You raise a very good point regarding the high and frequent CAPEX expenditures required to run their facility but it may be due to the continued development/improvement of their technologies necessary for using this particular feed-stock. Still it's an expense proposition but one IMO that possibly could be monetized partially in the future if/when they license some or all of their proven technology. So, for me UAN is an interesting candidate value stock mainly for their intellectual technology for processing "pet coke" waste. The five largest producers in the North American nitrogen fertilizer industry are Agrium, CF Industries, Koch Industries, Potash Corporation and Yara, all of which use natural gas-based production methods. I own shares in Yara International ASA (OTC Markets: YARIY). I was attracted to them based on their high BV (@ $32.24/share Price/BV=1.35x BV), favorable debt profile (1.19x Net income=LT debt) and in particular some of their research into optimizing fertilizer usage w/ new technologies in the Analytical Services Division (ie. The Yara N-Sensor™ offers farmers real-time control over fertilizer application and GPS based accounting of nutrient supply). Another company called AgJunction Inc. (AJXGF) (w/ a market-cap of $75Mln) provides hardware and software applications for precision agriculture farming. Their Cloud Services Division offers precision farming data applications that help w/ soil fertility, planting, fertilizer application to optimize yield, and even a spatial analysis real time application that provides the farmer crop & field specific data. So my value investment theme covering the Agriculture sector is one that considers the underlying profitability of the companies but also if they are developing far reaching new technologies that may help the farmer become more efficient and/or create inputs (ie nitrogen fertilizer) that do the same. I added a small buy of UAN yesterday because I believe it fits my value premise for my basket of Ag stocks. FWIW, I also own a small position in Intrepid Potash, Inc. (IPI) a potash supplier but it may be fairly valued at the current price and benefits if/when the Russian cartel can stabilize the world potash market. I am looking at selling these shares and moving the proceeds into UAN. EKS