What happened

Shares of Carl Icahn's holding company CVR Energy, Inc. (NYSE:CVI) rose over 12% last month thanks to timing. The stock slid at the end of July after disappointing second-quarter 2017 earnings were announced. Revenue was up and earnings were down. Worse, the billionaire's huge bet against renewable fuels backfired, resulting in a $280 million liability at the end of June, and two directors left the company.

But shares rebounded by the middle of the month. Why? Well, the slide from late July to mid-August marked a new low point for the stock in 2017, and apparently Mr. Market thought it was a bit overdone. Investors may want to consider another argument.

A man holding a white arrow pointed up while standing on a white column against a clear blue sky

Image source: Getty Images.

So what

CVR Energy is labeled a holding company because all of its revenue and earnings are derived from ownership stakes in nitrogen fertilizer company CVR Partners LP and petroleum processor CVR Refining LP. Both turned in respectable second-quarter performances, but it's all relative.

For instance, CVR Partners improved year-over-year earnings during the quarter, but in the first half of 2017 it was still far behind performance levels in the year-ago period. Unfortunately, nitrogen fertilizer selling prices continue to sink, hinting that the second half of 2017 may not be much fun for investors.

CVI Chart

CVI data by YCharts.

Meanwhile, CVR Refining was showing signs of progress over several consecutive quarters, then reported a sharp loss in the second quarter of 2017. It should be able to rebound with the rest of the American petroleum industry, but the most recent quarter proved that's not a slam dunk in the current market environment.

Now what

Although shares recovered to post strong gains in August, investors shouldn't overlook the continued poor performance of CVR Partners and CVR Refining, which has resulted in deteriorating earnings for CVR Energy. Then again, in an accounting miracle, the company has generated just enough cash flow (mostly from changes in working capital) to continue paying the current distribution payments of $0.50 per share -- despite the fact that the payout ratio exceeds 100%.

Long story short, last month was a wild month, and investors should probably expect volatility until the fertilizer and refining units get back on solid footing.