We are mildly bullish short-term (next few months). Longer term, that being two or three years, we think CVR Partners will face increased competition from large domestic nitrogen fertilizer expansions….given a fair risk-adjusted yield should be 8% (or 12.5 times CAD), we are increasing our six month target from $19 to $21.
(October 17, 2014 – CVR Partners LP $12.38 after hitting $21.93 on April 2, 2014)
I’ve been arguing for over two years that the potash international business was vulnerable to the lack of buying power of its major customers combined with their desire to be ‘Canpotex-free’, plus the increasing competitiveness of the Russians and Belarusians. And this has played out pretty much as forecasted. The stock is trading at $40 USD versus $60 a year and a half ago.
(October 17, 2014 – POT $31.92 US)
“I recently bought Air Transat or TRZ.B and Air Canada or AC.B, at $4-4.05 and $1.07-8 respectively. I don’t expect you to run out and buy airlines without detailed reports, but my gut is the airlines are a good contrarian area and can be bought for a small part of one’s portfolio”.
(October 17, 2014 – TRZ.B $8.40, AC.B $7.26)
I’m seeing some good value being created in the Canadian market but stress bond-like investments such as CIBC, BMO and TELUS, the latter having reported decent earnings this morning. The two banks yield 5% at $72 and $56, and TELUS “A”, their much maligned non-voting shares, yields 4.36% at $56.