UAN

Carl Icahn's $13 Million Buying Spree in CVR Partners ($UAN) Highlights Faith in 9% Dividend Yield Fertilizer Play

03/27/2025 21:51

Legendary investor Carl Icahn has been steadily accumulating shares in nitrogen fertilizer producer CVR Partners LP ($UAN) over the past five months. This small-cap fertilizer manufacturer has captured investor attention as it continues to receive consistent interest from the renowned activist investor despite recent price volatility. With a market capitalization of approximately $887 million, CVR Partners specializes in the production of urea ammonium nitrate (UAN) and ammonia. Based in Sugar Land, Texas, the company has seen its stock price fluctuate between $62 and $82 over the last six months. What stands out is Icahn's persistent buying pattern. According to Form 4 filings with the SEC, Icahn has consistently purchased $UAN shares from November 2024 through March 2025. His buying spree began with a significant accumulation of 55,552 shares (worth approximately $3.83 million) between November 6-8, 2024, and continued almost weekly until March 26, 2025. Icahn's total purchases amount to approximately 180,000 shares, representing an investment exceeding $13 million. His purchase prices ranged from $68.75 to $75.00 per share, indicating his consistent belief in the company's value across various price points. Notably, his recent transactions on March 25-26, 2025, were executed pursuant to a Rule 10b5-1 trading plan adopted on December 20, 2024, demonstrating a planned and systematic investment approach. All shares are held indirectly through subsidiaries such as CVR Services, LLC and UAN Services, LLC. While Icahn disclaims beneficial ownership of the shares except for his pecuniary interest, his ownership structure places him in a position to indirectly influence investment and voting decisions. $UAN's stock price has shown an upward trajectory since Icahn's concentrated buying began in early November 2024. The stock notably surged to near $80 in late November 2024 and reached the $82 range by mid-January 2025. After some consolidation, it currently trades around $75. Another factor enhancing $UAN's investment appeal is its high dividend yield. The current 8.97% yield ($6.76 per share) is particularly attractive to income-seeking investors. Additionally, with earnings per share (EPS) of $5.76 and a price-to-earnings (P/E) ratio of 13.08, the stock is relatively undervalued compared to market averages. Financially, the company reported revenue of $525.3 million and gross profit of $118.9 million, with discounted cash flow analysis suggesting it might be undervalued by approximately 104.6%. However, its debt-to-equity ratio of 1.94 is relatively high, which could be considered a potential risk factor. The fertilizer industry is inherently essential to global food production, with long-term benefits expected from growing world population and increasing food demand. However, in the short term, it remains susceptible to variables such as raw material prices, energy costs, and geopolitical tensions. It's notable that such concentrated and persistent investment in a single company by a legendary investor like Carl Icahn is uncommon. Icahn has demonstrated sharp insight in numerous corporate activities and investments throughout his career, and his continued interest in CVR Partners may reflect strong confidence in the company's value and growth potential. Investors should consider the cyclical nature of the fertilizer industry, volatility in raw material prices, and the risk of volatility due to $UAN's relatively small market capitalization. Additionally, as a small-cap stock, its limited trading volume means large entries or exits could significantly impact the share price. In conclusion, Carl Icahn's continuous investment in CVR Partners LP sends a strong signal about the company's intrinsic value and growth potential. While its high dividend yield and relatively low valuation may appeal to income-oriented investors, debt levels and industry-specific volatility remain potential risk factors. Prudent investors should monitor Icahn's movements while making decisions aligned with their own investment objectives and risk tolerance.

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