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CVR Energy, Inc. Message Board

  • sandsbagger sandsbagger May 29, 2013 8:32 PM Flag

    This stock will get massacred after the dividend

    Look at all the volume, people getting sucked in to the dividend distribution, thinking they are getting something for nothing. But whats left after the dividend isn't much, CVI will only own about 75% of CVRR and less than 50% of UAN. At current market prices of $30 and $24, that is only wroth about $4.4 billion. That equates to only $51/share. for CVI. Throw in another $5 share for remaining cash on hand net of debt and maybe some other hidden assets. You only looking at $56/share. And seriously, why should a shell company that now is less liquid to its holdiing CVRR and UAN and pays a lower dividend than those two, be likely to sustain a premium. a 5% discount valuation seems more likely. Alot of poor smucks will get their dividend, but then ride this down 15 dollars.

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    • Looking for entry points in this stock.

    • CVI is generating $3/year in regular dividends without the hassles of MLP accounting. At $50, that's a 6% yield. The strong cash generation of CVRR & UAN suggest that this dividend will be easily maintained and increased in the future. The cheaper shares get in the short term, the more I'll buy. My present holding has a basis well under $50/share and I plan to hold through retirement unless there are major macro changes in fossil fuel and fertilizer use (we're talking 20-30 years at least) . What happens in the next month is a buying opportunity (if your predicted massacre happens), nothing else.

      Sentiment: Buy

      • 1 Reply to beachcomber9572
      • CVRR has a 15% dividend and that is barely supporting it. I think you are right that it might hold $50. But that is 20% lower and you will need 3 years worth of dividends to make up for that drop. Just look at the sum of the parts. At the very least I would sell CVI and switch into CVRR at current prices. Icahn may keep selling out CVRR and UAN out of CVI at which point CVI will own nothing and be worth Zero. You will get $50 in special dividends. But why pay $62 for $50?

26.60+0.70(+2.70%)Feb 12 4:02 PMEST