UAN

Carl Icahn Doubles Down on Nitrogen Fertilizer Maker $UAN Amid Market Plunge, Continuing Six-Month Buying Streak

04/15/2025 23:44

In a turbulent market environment, legendary Wall Street investor Carl Icahn continues his steady buying spree of nitrogen fertilizer manufacturer CVR Partners LP ($UAN). Particularly noteworthy is his increased purchasing activity during the market downturn in early April. The U.S. market experienced significant volatility in early April 2025 due to concerns over the Trump administration's tariff policies. On April 4, $UAN shares dropped 7.5% to $69.58, followed by a further decline to $65.32 on April 7. During this period, the U.S. dollar recorded its largest daily drop since November 2022, falling approximately 1.7%, while small business confidence continued its three-month decline. Amid this uncertainty, Icahn actually increased his buying volume. According to SEC filings, between April 3 and April 15, Icahn purchased a total of 43,553 shares for approximately $2.99 million over nine trading days. Particularly striking was his consistent purchase of 6,071 shares daily for four consecutive days from April 7 to April 10, precisely when the stock was at its lowest. Icahn's buying of $UAN has been consistent since November of last year. Over the past six months, he has purchased shares almost daily, with a particularly concentrated buying period from November 6 to November 26, 2024, when he acquired approximately 117,000 shares for over $8 million. His buying pattern has continued steadily through December, March, and into April. Significantly, since December 20, 2024, Icahn has been making systematic purchases according to a Rule 10b5-1 trading plan. This plan represents a trading strategy established when an insider does not possess material non-public information, reflecting Icahn's long-term investment conviction. CVR Partners is a nitrogen fertilizer manufacturer headquartered in Sugar Land, Texas, primarily producing ammonia and urea ammonium nitrate (UAN). The company operates production facilities in Coffeyville, Kansas, and East Dubuque, Illinois, serving agricultural and industrial customers throughout the United States. Despite Icahn's consistent buying, CVR Partners' recent financial performance has been challenging. Total revenue for 2024 was $525.32 million, a 22.9% decrease from 2023. Net income also declined significantly to $60.90 million from $172.43 million the previous year. EPS was recorded at $4.97. However, the company still generated healthy operating cash flow of $150.54 million and maintains good short-term liquidity with a current ratio of 2.12x. Additionally, the company declared a cash distribution of $1.75 per unit for Q4 2024, demonstrating its commitment to returning value to unitholders. Particularly noteworthy in the segment performance is that ammonia revenue grew by 50.2% year-over-year to $353 million, indicating robust demand in the agricultural sector. Icahn's persistent buying can be explained by several factors. First, $UAN trades at a relatively reasonable valuation with a P/E ratio of 12.71. Second, the strong growth in the ammonia segment may signal future performance improvements. Third, Icahn already holds a substantial stake in CVR Partners and appears to have strong conviction in his investment strategy. Icahn holds $UAN shares indirectly through various subsidiaries (such as UAN Services, LLC and CVR Services, LLC) and is positioned to exert considerable influence on investment and voting decisions due to his ownership structure through entities like Beckton Corp. A key upcoming event to watch is the Q1 2025 earnings report scheduled for April 28. This earnings announcement will be a crucial indicator for assessing the company's recovery potential and the validity of Icahn's investment strategy. Investors should be cautious about CVR Partners' high debt level (approximately $568.85 million) and vulnerability to fertilizer price volatility. However, the consistent buying by a seasoned investor like Icahn certainly sends a positive signal. Currently, $UAN is trading around $72, showing partial recovery after the early April plunge. Following Trump's announcement of a temporary tariff pause on April 9, $UAN has been recovering along with the broader market rebound, though it remains below its early-year levels of over $80. The long-term outlook for the nitrogen fertilizer market is generally positive, alongside increasing global food demand. However, in the short term, variables such as energy price fluctuations, agricultural commodity prices, and trade policies could impact CVR Partners' performance. Despite these uncertainties, Icahn's continued buying can be interpreted as a strong signal of confidence in the company's long-term value.