SI
SI
discoversearch

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.

   Non-TechUAN - The variable distribution MLP that could go a long way


Previous 10 Next 10 
To: Elroy who wrote (166)8/26/2021 12:19:35 PM
From: Paul Senior
   of 356
 
Some possible reasons:

1. If somebody were interested in dividends -- high dividend yielders -- and they were scanning for that, it's not likely the data providers would show anything now other than $1.72 annualized, imo.

2. When the second "dividend" shows up, that will bring the yield very good for dividend seekers. Except that the people seeing that that is new, and so they would have to consider whether it's sustainable over many quarters.

3. People look and they will see: It's not a "dividend" they're getting, but a distribution. Along with a K-1. They have to ask themselves, do they really want to be involved in a limited partnership (MLP) and the tax implications that entails?

Share RecommendKeepReplyMark as Last Read


To: Lesser_Ape who wrote (167)8/26/2021 12:21:40 PM
From: Elroy
   of 356
 
Perhaps. I know all of that stuff, and I think it's a great investment.

The only big item on your list is "commodities will collapse", which means investors believe the price of fertilizer will decline.

That would ruin the UAN story. Lower fertilizer prices = less or no profits = zero distribution.

Fine.

However, fertilizer prices are still moving higher, and we are two months away from the seasonal period when fertilizer prices always rise. So.....I'm pretty sure fertilizer prices in Q2 2022 will be much above the current forward Q2 2022 fertilizer price, which is around $320/ton.

Again, we can all think of what is causing others not to buy UAN, but ...... to me, the bear story doesn't make any sense.

For Q3 2021 UAN will probably distribute $4.00, or more. It's very clear. And then, after that announcement, and the clarity that future distributions are likely to be at the same level, or more, the market will bid UAN units up $20?

I thought the market was forward looking? I'm NO fertilizer expert, and the outlook is obvious.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


From: Elroy8/26/2021 5:31:49 PM
   of 356
 
This page updates at about 2pm West Coast time each day.

It contains the pricing for the UAN futures contracts that traded during the day.

Q1 is above $330/ton for UAN fertilizer now.

It tells us where fertilizer pricing is going.

We are now in the weakest season for fertilizer. There is no fresh planting now. The current buyers of fertilizer are restocking what they sold in Q2 planting season, in preparation for future sales. Prices are weak, until November when they start to rise as customers buy from spring planting season.

Nevertheless, prices are going up. Above $300/ton for UAN fertilizer, UAN the MLP will shit money like there is no tomorrow.

cmegroup.com

Why the market doesn't see this is also beyond me. I'm not a fertilizer expert, and I know this. Where are the agriculture investment specialists?

Share RecommendKeepReplyMark as Last Read


To: Elroy who wrote (169)8/27/2021 9:04:46 PM
From: Area51
   of 356
 
I think it requires more patience. If you are backword looking UAN it doesn't look cheap now (EV = 1.2 billion, 6 month EBIDTA is 56 million and 12 month TTM is lower than that I presume; so EV/EBITDA is > 10). And company doesn't have any decent brokerage coverage. UAN should look cheap by the end of the fiscal year I predict (EV = 1.2 billion, with Publius FY 21 EBIDTA estimate of 337 million would be EV/EBITDA of 3.7 at the current price, and if you annualize second half EBIDTA it should look very cheap at its current price.

But you are right that we need to look forward - the point is that 3Q is the quarter that they will finally print a clean quarter reflecting ALL of higher spot prices. Will the market start to finalize capitalize some of this? Of course totally TBD but I like the setup here. If it pulls back to the 50 area again I'll add a few calls, but if it flies straight to an EV of 8 x 337 million that would make be very happy even with just my current position.

Share RecommendKeepReplyMark as Last ReadRead Replies (1)


To: Area51 who wrote (171)8/27/2021 11:01:09 PM
From: Elroy
   of 356
 
If you are backword looking

On what planet is the stock market "backward looking"?

I'm not fertilizer expert, and it's obvious to me that this MLP is going to produce massive distributions over the next four quarters. It's obvious.

Are we to assume that the rest of the market does not know what we know?

Share RecommendKeepReplyMark as Last Read


From: Elroy8/29/2021 4:25:20 PM
   of 356
 
I've read this storm Ida is moving right through some of competitor CF's UAN and Urea manufacturing plants.

This coming week could be interesting.....

Share RecommendKeepReplyMark as Last Read


From: Elroy8/31/2021 7:02:37 PM
   of 356
 
New survey forecasts 2% increase in 2022 corn planting

farmprogress.com

Share RecommendKeepReplyMark as Last Read


From: Elroy9/1/2021 10:24:33 AM
   of 356
 
46% of farmers expected input costs would be worse in the coming year, with only 16% projecting lower input costs





Agriculture Confidence Index Results
Agriculture Confidence Index Shows Farmers Confident, but Concerned About Input Costs







https://www.dtnpf.com/agriculture/web/ag/news/business-inputs/article/2021/08/31/agriculture-confidence-index-shows

Share RecommendKeepReplyMark as Last Read


From: Elroy9/1/2021 5:30:33 PM
   of 356
 
Q1 UAN NOLA futures up $15 on average today.......get ready for UAN the MLP to explode upward fairly soon.

cmegroup.com

At $300/ton UAN the MLP can easily pay $20 per year.

It appears 2022 prices are going to be well above $300 ton. The 2022 big buying season starts in November 2021......

Share RecommendKeepReplyMark as Last Read


From: Elroy9/2/2021 9:49:02 AM
   of 356
 
The Mosaic Company Announces Hurricane Ida Impacts

finance.yahoo.com

Wind damage to the Faustina and Uncle Sam facilities from the storm is expected to result in reduced production as repairs are completed over the next 8 to 9 weeks. The following expectations also include estimates of production loss from an August equipment failure at the company's New Wales facility in Florida.

In the third quarter, relative to historical averages, production is expected to be down by approximately 300,000 tonnes. Fourth quarter operating rates are expected to improve sequentially, but production may still be down from historical averages. Mosaic plans to provide an update, including estimated financial impacts of the hurricane, when it reports third quarter results.

--

We care about the affect of Ida on CF's UAN manufacturing facilities in the area. I read CF manufactures 50% of the UAN consumed in the US in that region.

Share RecommendKeepReplyMark as Last Read
Previous 10 Next 10