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: E_K_S who wrote (73225)	8/1/2023 10:05:04 AM
From: Elroy	1 Recommendation Recommended By Area51 Respond to of 78816

Yes, UAN fertilizer tons sold was low. They took at $20m charge for working capital. That probably reverses in Q3 or Q4. If not for those two factors, distribution would have been closer to $7 or $8. I think UAN is OK now, but there's a reasonable chance that the Q3 distribution is zero (fertilizer prices for summer fill were well below the just reported Q2 prices), and after that CVR is back to $3 or more per quarter. So I think buying or holding here depends on how patient you are. I plan to watch, and consider re-entering in January 2024 if the price is low enough.

To: E_K_S who wrote (73225)	8/1/2023 6:35:25 PM
From: Elroy	Read Replies (1) \| Respond to of 78816

I breezed UAN's conference call. Conculsion - fertilizer prices in Q3 2023 (which they have already pre-sold) were quite low. However, the positive is the low prices brought out the customers, and demand (at the low prices) was strong. Fertilizer prices have moved up well (up 20%) from the Q2 2023 pre-sell prices. However, the up move in fertilizer prices won't be reported until Q4 results, cuz CVR sold a lot at the low Q3 pre-sell prices. So, my hunch is zero dividend next quarter, and then about $2-$5 in the following quarters, depending on charges and whatnot. It's a big drop from previous $10 per Q distributions, but the UAN unit price seems to move more with the fertilizer industry than with it's distributions, so if fertilizer prices continue to rise, I think UAN will not pay large distributions for a while, but the unit price may do well along with the fertilizer group. I was in it for the distributions, so my interest in the story is diminished. My educated guess (based on the forward price curve for UAN fertilizer) is over the next four quarters it should pay $12 or more. Not bad for a stock that's probably $80 after the current Aug $4.14 distribution gets paid. I will watch and perhaps re-enter around Jan/Feb when decent distributions should resume. I sort of don't think the average UAN owner knows that it probably pays zero next quarter, so I wouldn't want to own it on the day of that news. Other than that, I'd expect it to move with the fertilizer groupof stocks, and with the fertilizer forward prices for UAN.