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TMFLegendPhoenix (24.26)

Traveling through hyperspace ain't like dusting crops, boy.

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17

September 02, 2011 – Comments (5) | RELATED TICKERS: UAN , CVI

Has there ever been a dude who frequently shows up when you and your friends hang out, yet no one likes him?  He never gets the subtle hints that he's unwelcome, yet you and your friends are too polite to straight-up explain to him that everyone thinks he's a total d-bag.  This happened to me once, the guy must have been a friend of a friend because nobody seemed to like him.  Behind his back we used to call him "Dorothy Downer" because he had a negative attitude about everything all the time.  Anyway, one time my friends and I had just finished a huge project.  We were really psyched because this project was totally unique and we thought it had the potential to be a real game changer.  While we were congratulating our selves and talking up how awesome this technology we created was, in walked "Dorothy Downer".  Upon seeing us all patting each other on the back, Dorothy said something to the effect of: 
"Don't be too proud of this technological terror you've constructed"
What a buzz kill.  And when one of my friends tried to tell old Dor'th (we sometimes called him "old Dor'th" for short) to stuff it, "Dorothy Downer" started to choke him.  Seriously, who chokes people? 
Despite Dorothy's negativity, we tested the project and it was a huge success and we received a lot of publicity as a result.

I was recently reminded about that feeling we had before Dorothy Downer killed the mood: knowing that we had a unique piece of technology that would give us the edge against our competition.  What reminded me was the state-of-the-art process of creating urea ammonium nitrate from petroleum coke as opposed to doing so using natural gas.  Petroleum coke is the solid, dry byproduct of refining oil and currently only one company in North America uses it to make their nitrogen fertilizer.

My stock pick for this week is CVR Partners (NYSE:UAN) at roughly $23.00 / share.

In April of this year, CVR Partners was spun off of CVR Energy (NYSE:CVI) - an oil refiner, which is where CVR Partners gets all their cheap petroleum coke.  The facility that produces the ammonia and urea ammonium nitrate (UAN) fertilizers is located in Coffeeville, Kansas – not far from their customers: North American farmers.  The company is currently working on a plant expansion that will increase production by 50% in 2013. 
CVR partners is a Master Limited Partnership, so they're legally obligated to say things like "unit holder" and "distributions" when they're talking about "shareholders" and "dividends".  But more importantly, to qualify for their special tax treatment, they have to pass most of their income on to unit holders.  I'd buy CVR Partners just for their commitment to growth, the proximity to their customers and their massive cash distributions – but with a buy-and-hold strategy, I'm curious to see what happens when their competition has to raise fertilizer prices if natural gas were to get more expensive. 

 

I'll leave you with the ending of my story:  I suppose old Dor'th eventually got the message that we didn't enjoy his company because he stopped hanging around us.  As for our project, unfortunately some jealous vandals smashed it up.  This is why we can never have nice things.

 

"I should disclose that I own some UAN and I plan to buy more very soon."

 

5 Comments – Post Your Own

#1) On September 02, 2011 at 9:27 PM, blesto (30.88) wrote:

Are you sure it wasn't the 'Empire' that did it?

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#2) On September 02, 2011 at 9:39 PM, TMFBiggles (32.29) wrote:

It sucks that you had to put up with Scumbag Steve, but I enjoyed your story and was moved to try to milk it for CAPS points. Are you implying that you came up with the technology that has made this process possible? Or was it a different kind of technology that you invented, and if so, can you tell us what it is so we can invest in it on the ground floor?

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#3) On September 03, 2011 at 2:43 AM, TMFLegendPhoenix (24.26) wrote:

Look, blesto, I can't get involved. I've got work to do. It's not that I like the Empire; I hate it, but there's nothing I can do about it right now... It's all such a long way from here.

 

TMFBiggles-

i didn't have anything to do with CVR Partners' process of creating UAN.  when i was researching that company, i read about this technology and it made me think of an innovation of my own.

the project i refered to was an online-database application i helped develop while working in the netherlands back in the 90's. at the time, it was pretty awesome .  now it's pretty commonplace.

web development has all but passed me by.  although i still have a few cool tricks up my sleeve – mostly little things to make my life easier at my current job where my duties include updating my company's website.

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#4) On September 03, 2011 at 5:37 AM, TMFLegendPhoenix (24.26) wrote:

I feel I should elaborate on my project because my previous post made it sound like we made an online “shopping cart.”  It’s 4am and I can’t stop thinking about it so I’m hoping that if I write out what this was, it will bore me back to sleep. 

The problem we were initially asked to address was “research overlap”.  Basically multiple R&D teams were unaware that they were doing identical research.  If they had the ability to share previous and current research efforts, we concluded, it would cut down on redundancy, and therefore increase development. 

Our solution ended up being much more interesting than what we set as our goal.  We created a piece of software that would track research threads.  The idea was that people are constantly seeking out and learning new things during their research journey.  But many interesting and potentially helpful things fall by the wayside when the path of the research goes in one direction as opposed to another.   The goal of our project was, to some degree, track the thought process of a researcher so that she (or someone else) could retrace her steps and investigate avenues different than the initial path of research.  Just like when you were a kid reading “Choose Your Own Adventure” book, this software was the equivalent of keeping your fingers on the pages of choices you didn’t make so you could go back and see how the story would have played out had you chose differently. 

For example, let’s say you’re looking for a company to invest in.  You start with the most valuable company, Exxon Mobile.  While reading some news about Exxon, you stumble upon a recent statement from the Energy Information Administration revealing that crude inventories have grown by 5.28 million barrels last week.  This leads you to investigate companies that focus on refining.  One company, CVR Energy, has been doing particularly well.  Not only does CVR Energy make money on petroleum refining and marketing, they also own a majority interest in and serve as the general partner of CVR Partners – a producer of ammonia and UAN fertilizers.  While checking out the competition in the fertilizer business, you learn about CF Industries, Terra Nitrogen or PotashCorp. 

At any point, you could have made different choices as to the direction of your search and ultimately end up in a drastically different place.  Wouldn’t it be nice to be able to go back and revisit each choice to see where alternatives might take you?  You could track research threads of your colleagues and see where their investigations are leading them… or what possibilities they could unravel for you.

 

Although we did not develop this for the purpose of investment research, we were very excited about the possibilities of this concept in other fields beyond our own.  Unfortunately our team leader’s father became gravely ill and his involvement waned.  The other members of my project team either got development jobs or went back to school.  I was lured away by the promise of riches in the early-2000’s dot-com bubble.

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#5) On September 03, 2011 at 6:55 AM, devoish (96.28) wrote:

Excellent post.

Best wishes,

Steven

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