I want to mention CVR Partners ($UAN) again to raise awareness; it’s up about 40% since I first mentioned it here. We all know fertilizer has been on an incredible run—but I think there’s plenty more left. Many people think that the recent run is due entirely to the war… and while it’s certainly had an impact, the supply shortages and market dynamics were already setting up for a perfect storm even before Putin lost his shit. The invasion amplifies all of this.
$UAN (I’m intentionally calling it $UAN instead of UAN to disambiguate the stock from the fertilizer… UAN is a common abbreviation for urea ammonium nitrate, a liquid fertilizer product) is a master limited partnership (MLP). This has many implications, but the most important one to be aware of is that MLPs pay zero taxes—instead they distribute all of their profit to shareholders (and it’s specifically called a distribution, not a dividend). This is important to be aware of because you will be taxed on distributions received even if it’s in a tax-advantaged account (e.g. 401k, IRA, etc).
$UAN was already looking as though it could pay $40/share in distributions this year, well before the invasion. It’s certainly likely to be higher than that now. This will be a cash printing machine this year. But even with all this goodness, I do also want to warn that this stock behaves bizarrely at times—see my previous post in the link to see what I mean. It tends to plateau for long periods of time and then rockets upwards.
Im currently long many shares at an average of $106.67. I may add more in the future, but I will likely wait a bit right now to see if there’s any pullback.