Tweet

Plum Capital

20 Sep, 11 tweets, 3 min read

I know everyone is seeing a wall of red and feeling depressed today. Plum is here to brighten up your day 😅 with yet another "pounding the table" for $UAN. I've disclosed this before, it was my biggest position for a while until $ATTO took over recently.

I have a feeling $UAN is going to go parabolic in short order and put all my other positions to shame. Let's start with the unit price action today in a horrible tape

Yes $UAN is literally the only green in my portfolio today... but for good reason I think, because the macro is getting unbelievably positive and I think the market is finally waking up!

It's no secret that nat gas prices are spiking across the globe, and with the winter approaching, who knows where nat gas could go to. Look at Europe, natty gas may be approaching a crazy S/D imbalance, and this is showing up in prices

bloomberg.com/opinion/articl…

This is leading to a lot of supply being curtailed, at least in the short term. Nitrogen fertilizer production primarily relies on natural gas as feedstock, and marginal production in Europe is simply not profitable with current natural gas prices.

As global cost curve shifts to the right, this should pressure import volumes and elevate import pricing into the US. Nitrogen Fertilizer prices in the US are likely to go even higher over the coming quarters, and this is already showing up in the UAN NOLA futures

Add on top of that, Ida disrupted production at several US facilities, including CF's Donaldson facility for a few weeks, pressuring already tight supply. Not to mention pending USITC decision on countervailing/antidumping duties from Russian and Trinidad

usitc.gov/press_room/new…

Yet the market is still not giving credit for $UAN because of the disappointments over a couple quarters this year in regards to pre-selling at lower prices. Good news is that 3Q and onwards, they will be full beneficiaries of higher spot prices

Once $UAN reports 3Q with a healthy distribution reflecting this, it's game over imo. I wouldn't be surprised to see anticipation building over the next month and a half to see units much higher than current levels of low $60s...

As much as I'd like to consolidate my rambling thoughts and get a substack post out, there is plenty of good info out there in the public domain. I think I have no real additional insight, other than to say that the opportunity is hiding in plain sight.

This is a great place to start (article and comment sections) for a quick refresh on the situation. As always DYODD, commodities/cyclical investing is always fraught with danger.

seekingalpha.com/article/443014…

• • •

Missing some Tweet in this thread? You can try to force a refresh

This Thread may be Removed Anytime!

Twitter may remove this content at anytime! Save it as PDF for later use!

More from @Plum_Capital

Plum Capital

@Plum_Capital

17 Sep

Thread for my largest position $ATTO - the latest Substack post went out yesterday afternoon, will link in thread below. Encourage any interested Fintwit to read the post in full, but here is the TL:DR version. Enjoy...

$ATTO - Atento is a leading CRM/BPO player in LATAM, with a growing presence in the US and EMEA as well. This is a $400mm market cap, $200mm EBITDA (pre-leases) business that is relatively unknown to the value community, one that I'd readily characterize as a "hidden gem".

Company is very undervalued, only trading at ~5.2x EV/EBITDA on 2022 guidance, with ~20% FCF yield on market cap based on next year's numbers. Checks all the obvious "value" boxes.

Read 16 tweets

Plum Capital

@Plum_Capital

15 Sep

Tomorrow afternoon, I will be releasing my largest and highest conviction position on Substack. Have done 6 months+ of work and after much deliberation, finally developed enough conviction to put pen to paper and share with the public

Am keen to share asap, but having a quick management call tomorrow to tie up any final loose ends. Always good practice, though I generally try not to bother management too much in any of my investments. They have a business to run!

I like this one because not only is it fundamental deep-value, there is a sexy event-driven angle plus a curious case of reflexivity at work - i.e. the higher the price that the market assigns on the shares, the better the eventual outcome, which I think is not too far away

Read 5 tweets

Plum Capital

@Plum_Capital

13 Sep

$MKTY released August numbers this morning before market open. As anticipated, results were good and this update certainly reduces some fears around execution risk, as the facilities are ramping well.

I am not going to provide any further commentary until more substantial developments occur. Not trying to pump anything and interested investors can review the results for themselves.

In fact, the subdued stock reaction this morning tells me that not many people are doing serious work on the name and $MKTY still remains an undiscovered gem. I've only been adding on dips since my initial Substack post on Aug 26th

Read 6 tweets

Plum Capital

@Plum_Capital

26 Aug

Here's a quick thread for my latest substack post for $MKTY - a BTC miner that is flying completely under the radar and is poised for a rapid re-rate in the coming months. $SPRT is all the rage, but $MKTY should be interesting for curmudgeonly value folks

$MKTY is a rapid execution story - the Company's EcoChain division is expected to scale to 53 MW of capacity by 1Q'22, once all 3 facilities (TNT, Python, Anaconda) are fully ramped. The pitch here - they all rely on very low cost renewable energy

Mgmt. published illustrative set of projections back in May this year which called for $42mm of annual run-rate EBITDA to be achieved by 1Q'22, if BTC price of $45k holds

ecochainmining.com/news/businessm…

Read 11 tweets

Plum Capital

@Plum_Capital

25 Aug

Quick thought exercise and a trade idea - I have tweeted about fertilizer stocks in the past, and many of them disappointed 2Q earnings (esp. $UAN and $CF). I was caught off-guard about poor price realization, mainly driven by forward selling.

They sell volumes for anywhere between 1-6 months forward. I didn't realize the tail could be this long (in the case of $UAN due to poor mgmt. communication but w/e, my numbers were still way off). So 2Q did not reflect all of higher spot pricing

But we need to look forward - the point is that 3Q is the quarter that they will finally print a clean quarter reflecting ALL of higher spot prices. Will the market start to finalize capitalize some of this? Of course totally TBD but I like the setup here...

Read 10 tweets

Plum Capital

@Plum_Capital

19 Aug

I added meaningfully to my $JAKK position in the low $12s. Short thread for anyone still following the name or doing work. I think r/r is getting too good to ignore as the Company gets caught up in the small-cap selloff

The thesis hasn't really changed since my initial Substack writeup. In fact after a stellar 2Q, the market was figuring out the potential here and the stock rallied to $15.5 - a very rapid rerate from $9-10/share pre-earnings

Yet now the stock is off almost 25% from recent highs... to be fair there have been some market-related updates; shipping/logistics challenges around the globe seem to have gotten a bit worse, and some COVID worries, but positive news too, such as the expanded child tax credits

Read 7 tweets

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!