Rentech Nitrogen Partners, LP (RNF)
Rentech Nitrogen Partners, LP (RNF) is a name we’ve invested in successfully in the past: In May 2013, we made an even 50% on the fertilizer play.
The firm is a leading fertilizer business based in East Dubuque, Ill., situated right in the midst of what is called the Mid Corn Belt of America, adjacent to Wisconsin and Iowa, the largest market in the United States for direct application of nitrogen fertilizer products. The company sells virtually all of its production to within a 200-mile radius of where it’s manufactured. Because its location is among the highest producing states, it allows the company to sell nitrogen products into higher-priced agricultural markets, realizing higher average net sales prices per ton of ammonia than other publicly traded competitors.
I liked RNF for a long-term play, but after several dividend decreases, I opted to cash in our profits on the name to remove some of the risk from our portfolio. But the fertilizer story is still a strong one, so it may be suitable for dividend investors who can tolerate more speculation. Grain prices are up big as drought conditions emerge and the Ukraine situation unfolds. Fertilizer plays like RNF remain a consideration, but I’m not ready to act yet.