Friday, September 6, 2013

Time To Buy Into This Icahn Backed Refiner

The following is a "small cap insight" column written by Sarfaraz A. Khan about a company with a market cap of less than $5 billion. 

CVR Energy (CVI) is an oil refiner and marketer of petroleum fuels and a maker of nitrogen fertilizer products. It primarily operates under two segments, petroleum business, called CVR Refining (CVRR), and nitrogen fertilizer business, called CVR Partners (UAN). Both of its subsidiaries are Master Limited Partnerships. So essentially, CVR Energy is a holding company of these two MLPs and owns significant common units of the companies. The market cap of the three firms is presented below.

Market Cap in $ Millions
CVR Energy
CVR Refining
CVR Partners

The main focus of the article is on the holding company. CVR Energy has reasonable valuation and has also made significant improvements in their operations. It is one of the best dividend stocks out there which pays like an MLP. In this article, I will discuss the company's performance over the last five years, its future prospects and present some of the main points which I believe makes this relatively small energy play an attractive buy.
Carl Icahn
Carl Icahn owns nearly 80% of CVR Energy. The billionaire investor initially started with a 14.5% stake in the energy firm in January 2012. CVR Energy has now become Icahn's second largest holding, behind only his Icahn Enterprises.
Quarterly Results
Earlier this month, CVR Energy released its quarterly results (available here) in which its net sales dropped by 3.81% year-over-year to $2.22 billion while …. Read More