Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: The_Commodore who wrote (66796)	3/4/2021 12:07:31 PM
From: Area51	2 Recommendations Recommended By pak73 The_Commodore Read Replies (2) \| Respond to of 78814

Maybe the better question is why is UAN (the stock) trading at a significant discount from its 2018 highs when the current price of UAN (the commodity) is significantly greater than the 2018 highs. This is a nice summary of the UAN bull case: reddit.com

To: The_Commodore who wrote (66796)	3/4/2021 8:43:43 PM
From: Elroy	2 Recommendations Recommended By Area51 The_Commodore Respond to of 78814

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.