Terra Nitrogen Company, L.P. (TNH)

jester112358 (< 20) Submitted: 7/03/07 4:38 PM

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What was a value stock with a good dividend (which was my motivation for owning it from 67 until it reached $99) has become a day traders speculative play. Just watch how the stock reacts to the overall market on its big days. Once the market reverses speculators exit quickly, the stock goes back down then they re-enter the next day and ride the trend up. Though I still have it in CAPS there are much better current ethanol plays like ADM.

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darkgoody (< 20) Submitted: 7/06/07 12:21 PM

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Thanks for the reply. Right now I'm thinking that I'll hold the stock until shortly before they report earnings again. I'm guessing that earnings will bring the valuation more down to earth. Do you think this is a good exit point or should I dump the stock sooner?

Also, on ADM, I'm worried that ethanol producers will get squeezed with so much capacity coming to market so quickly. I've stayed away from ADM and all of the pure ethanol plays for this reason, preferring suppliers like DE and TNH. I'd be curious to hear more of your thoughts on ADM.

I'm a new investor and I appreciate the feedback.

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jester112358 (< 20) Submitted: 7/19/07 3:26 PM

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I think you'd be safe holding it at this level, but don't buy more. The stock has a large amount of insider holding (like dryships) and is sort of holding a private company due to its small cap nature and the fact the insiders know the stock is going up and so aren't selling much. Its mid-CAP competitors all have higher P/E (POT, MOS etc.) and lower dividends. But these other companies are very popular right now too. Thus, within this sector this is still a growth/value stock despite its premature run-up. I really like ADM in the next six months as its stock has not benefited from the government subsidized AG sector runup. I look upon it as the exxon mobil of its sector. Its also a significant new George Soros holding, which adds to my confidence. I've recently added it to my CAPS and personal portfolio. The target estimates of 43-47/share may be a little conservative, but even if correct provide good upside at the current valuation. Basically, my personal portfolio is heavily weighted to oil/energy/materials/infrastructure/shipping. You will pay more for any of these sectors and less for financials, consumer goods, etc. This is just market sentiment and Mr. Market often gets ahead of himself, hence the lofty trailing P/Es in the shipping, infrastructure and AG sectors. Forward earnings (2008) will likely justify the current valuations. As always, only play with your mad money!

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