CVR Partners, LP (NYSE:UAN)

CAPS Rating: 4 out of 5

Recs

5
Player Avatar TMFBlacknGold (98.94) Submitted: 6/5/2012 10:32:11 AM : Outperform Start Price: $16.92 UAN Score: -41.43

I bought this last summer during a "fracture" at $20.46. It was treating me pretty well with a yield over 10% and getting close to $30. Then Icahn showed up to CVR Energy and everything changed.

CVR Partners seems to have fallen just on the simple observation that little information has been provided on how it fits into a plan to sell CVR Energy and maybe a little on the weaker than expected fertilizer prices this summer. I don't see how the business changes with a sale, without a sale, with a sale of CVR Energy, or with any possible combination of sales. Pet coke is to be provided from the adjacent oil refinery through 2027. The plant expansion next year should be good news if fertilizer prices recover. Also, the facility is next to the higher margin agricultural belt, which gives a $25 per ton safety net just due to logistics.

I may be a little biased, but it seems like a market overreaction to me. Either way, there's no reason for me to sell at these prices. I'll hold on and wait to see what happens. If the price slides to the mid teens I'll have to consider adding more shares.

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