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CVR Partners, LP Message Board

  • halfsure1 halfsure1 Apr 15, 2013 7:52 AM Flag

    from seeking alpha

    CVR Partners UAN is an LP formed by CVR Energy (CVI) to own and operate its nitrogen fertilizer business. The limited partnership produces and distributes nitrogen fertilizer products used by farmers to improve the quality of their crops. The company also pays a 7.55% dividend yield.

    The company has notable tailwinds promoted by positives in the fertilizers and agricultural industry. According to the USDA's March 2013 report, farmers expect to plant 97.3 million acres with corn this year, driven by growth in global nutrient use from developing countries in Asia and Latin America. In reality, the increase should come from rising populations and income levels in these countries.

    Other notable fertilizer company Terra Nitrogen has greater exposure to natural gas prices, which is a negative for them and positive for CVR assuming prices rise; CVR has pet coke cost advantages. The outlook for nitrogen prices should remain strong as farmers look to make up ground lost during last year's historic drought.

    CVR's management has guided total distributions to come in between $2.15 and $2.45 per share for this year, a 27% increase (from the mid-point) over last year. At the mid-point ($2.30), the dividend yield would be 9.5%. CVR had little hedge fund interest at the end of 2012, but did see notable billionaire investor Jim Simon of Renaissance Technologies taking a new position in the stock (check out Simons' cheap stocks).

    Bottom line

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