CF Industries Holdings, Inc. (NYSE:CF)

CAPS Rating: 4 out of 5

The Company is a manufacturers and distributors of nitrogen and phosphate fertilizer products in North America.

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Player Avatar morningstarboy (80.75) Submitted: 1/2/2008 3:25:08 PM : Underperform Start Price: $104.03 CF Score: -118.36

As of close of business on 12/31/07, this was a 1-star Morningstar stock trading at more than double it's Morningstar fair value.

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Member Avatar FourthAxis (< 20) Submitted: 5/1/2008 12:55:50 AM
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Damn! An analyst rated this one star...it MUST be time to sell! /sarcasm.I'm glad you're doing this out of due diligence or else I'd want to vomit.

Member Avatar ROEoutshinesGOLD (99.06) Submitted: 4/25/2013 2:14:00 PM
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Well, the original pitch was written more than five years ago. Today, Morningstar rates CF with three *** stars (hold) and a fair value of $155 (link below) :

http://financials.morningstar.com/competitors/industry-peer.action?t=CF

On the other hand the S&P ratings has it at two ** stars (sell) and a fair value calculation of $205.20. CF's price of $179.15 implies that It is undervalued by about 14%, as measured against the fair value calculation. Nonetheless, S&P's twelve month target price is $180.

Member Avatar ROEoutshinesGOLD (99.06) Submitted: 7/31/2013 4:18:17 PM
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Update:
Currently, CF is rated 2** stars by Morningstar and the Fair Value calculation remains at $155.
Presumably the downgrade is due to a recently elevated share price of ~ $200 :

financials.morningstar.com/competitors/industry-peer.action?t=CF

Recently, Daniel S. Loeb has made an investment in CF. He is probably responsible for the very recent spike in CF's share price as some investors are likely riding his coattail. Here's the story from Reuters:

Shares of CF Industries Holdings Inc (CF.N) spiked nearly 12 percent on Monday (July 29, 2013) after activist hedge fund Third Point LLC said it had acquired a stake in the U.S. fertilizer company.

CF, the world's second-largest maker of nitrogen fertilizer, should be paying a bigger dividend to shareholders, Third Point said in its quarterly newsletter. The fund, headed up by Daniel Loeb, did not disclose the size of its equity position in the letter.

"CF currently trades at an unwarranted discount to fertilizer and commodity chemical peers," the hedge fund said in the letter, dated July 29. "We believe its structural cash flow generation strength is misunderstood and that management should deliver a much larger dividend to its shareholders."

Third Point said that CF's access to low-cost North American natural gas - the primary input in nitrogen fertilizer production - gives the company an advantage over global peers with higher input costs. The spread between the production costs of CF and higher-cost rivals is a sustainable stream of cash flow, it said.

The world's biggest nitrogen producer is Norway-based Yara International ASA (YAR.OL).

CF was not immediately available for comment. CF, based in Deerfield, Illinois, is scheduled to report second-quarter results on August 6.

The CF's dividend yield - the ratio of the annualized dividend to the price of the stock - is below that of other fertilizer companies like Yara, Agrium Inc (AGU.TO), Potash Corp of Saskatchewan (POT.TO) and Mosaic Co (MOS.N).

The discussion between CF management and Third Point is likely to be over whether CF should continue with its $3.8 billion expansion of U.S. fertilizer plants in Louisiana and Iowa, or scale it back and hike the dividend, said Mark Gulley, analyst at BGC Financial LP.

A Third Point spokeswoman said it had no further comment.

CF is the second major North American fertilizer company to attract the interest of an activist investor. Jana Partners bought a stake in Calgary, Alberta-based Agrium last year and pushed for a breakup, but the company swept a proxy vote in April.

CF shares surged 11.8 percent or $21.30 to $202.30 in New York, touching their highest price in four months.

(link to original source of the news article) :

reuters.com/article/2013/07/29/us-cfindustries-thirdpoint-idUSBRE96S0WW20130729
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Daniel Seth Loeb is a notable activist-investor and the founder and chief executive of Third Point LLC, a New York-based hedge fund:

wikipedia.org/wiki/Daniel_S._Loeb

wikipedia.org/wiki/Activist_shareholder

insidermonkey.com/hedge-fund/third+point/16/

gurufocus.com/StockBuy.php?GuruName=Daniel+Loeb

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