Terra Nitrogen Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of fertilizer company Terra Nitrogen (NYSE: TNH  ) fell as much as 13% today on nearly three times the normal volume.

So what: News wires from Terra were quiet, but Seeking Alpha published an article suggesting selling Terra Nitrogen and buying competitor CVR Partners (NYSE: UAN  ) . Could it just be coincidence that CVR is up today and Terra fell through the floor?

Now what: The author cites a call provision for Terra from CF Industries (NYSE: CF  ) , the company's majority owner, as a major reason to sell. But the provision calls for a purchase price of an average of the previous 20 days, a nice premium after today's drop. I don't see a big reason to sell today, but being aware of such provisions is something investors should keep their eyes on.

Interested in more info on Terra Nitrogen? Add it to your watchlist.

Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (9) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 20, 2011, at 5:34 PM, pntwlkr wrote:

    Funny. I read the Seeking Alpha piece and it reiterated some concerns I have had for awhile. At the opening this morning I took a look at the capital gain I had in my TNH position (in a tax protected acct) and sold that dollar amount and bought an equal dollar amount of UAN. Since I still have about half my position in TNH, I am not sure I am all that happy with the price drop. Anyone have any other theories regarding this price drop?

  • Report this Comment On September 20, 2011, at 5:41 PM, unfatcat wrote:

    Todd Johnson is an evil-minded troublemaker, maybe?

  • Report this Comment On September 20, 2011, at 9:16 PM, cxowboy wrote:

    This was old news. Didn't anyone know? How big an issue is this? Does CF even have the money to call? Lower price can't help their balance sheet.

  • Report this Comment On September 20, 2011, at 10:38 PM, manhattan123 wrote:

    This once again is another scare tactic. As cxowboy wrote it is old news. It's bad enough that everyone is jittery about the stock market. The slightest news draw wild stock swings. I give the Investor who owns this stock the benefit of the doubt that they have done their due diligence. These articles are so annoying. Hang in there.

  • Report this Comment On September 20, 2011, at 10:40 PM, bettaboy wrote:

    On August 5th the stock pps had a 30 point spread! This stock which I have been in for many years (sometimes trading) often has huge swings.

    MHO it was due for a pullback and had I been home I would have added a few more shares (buy point originally 100 and change and years ago even lower). Nothing has actually changed and I personally do not buy or sell on a speculative possibility.... if it does happen then I base my decisions on the actual event. Meanwhile handsome distributions... MHO of course.

  • Report this Comment On September 21, 2011, at 6:18 PM, alicerice88 wrote:

    The Seeking Alpha article was nothing but insane. Someone profited from this, while reporting 25-year-old "news." The CF Industries call option has been written into the paperwork since the beginning. They have not yet chosen to exercise the option, but if they did today, they would have to pay $184 a share. In addition, the company's earnings are climbing. As we all should know the price of TNH product is rising, and everything is great at the company. No, I don't work for them, but I do my homework before writing "news."

  • Report this Comment On September 21, 2011, at 6:30 PM, cribeiro wrote:

    What do you need to know about TNH is quite simple. The truth is here. Your article does not contain any valid information

    http://blog.beyond-trading.com/blog/2011/9/21/sergio-vieira-...

  • Report this Comment On September 22, 2011, at 12:44 AM, unfatcat wrote:

    There's some serious hanky-panky going on here. Somebody's making lots of money shorting this stock and it's not because they geniuses or they've got a crystal ball.

  • Report this Comment On September 22, 2011, at 11:43 AM, TMFTheDoctor wrote:

    Fertilizer stocks are down all across the board. TNH is down the most, but everything is falling as ag prices collapse, due in part to a strengthening dollar and also signs that China may be slowing down. This isn't isolated to TNH.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1556631, ~/Articles/ArticleHandler.aspx, 9/19/2014 8:21:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement