Author Topic: IPI - Intrepid Potash - A new small FFH holding  (Read 3885 times)

FFHWatcher

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IPI - Intrepid Potash - A new small FFH holding
« on: October 18, 2017, 10:39:06 AM »
I don't think it has been discussed with FFH yet.
In March 2017 FFH participated in a secondary offering of IPI shares.
Intrepid's Potash sales are way down. Looks like they used equity to pay down debt and restructure a bit.
Looks like FFH took about a third of what was offered.
16,666,667 shares. 13% of shares o/s
$1.20 issue price
$20M investment (sprinkled it around to Brit, ORH, FFHL, etc.)

End of Q3 price of IPI $4.36 (Current price of IPI $3.83)
Unrealized gain at end of Q3 of $52M or 2.5x's in 6 months
Someone made a good (short-term) call


ourkid8

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #1 on: October 22, 2017, 10:04:15 AM »
 It's great to see their investments starting to fire on all cylinders, eventhough this is a rounding error but it all adds up. 

I don't think it has been discussed with FFH yet.
In March 2017 FFH participated in a secondary offering of IPI shares.
Intrepid's Potash sales are way down. Looks like they used equity to pay down debt and restructure a bit.
Looks like FFH took about a third of what was offered.
16,666,667 shares. 13% of shares o/s
$1.20 issue price
$20M investment (sprinkled it around to Brit, ORH, FFHL, etc.)

End of Q3 price of IPI $4.36 (Current price of IPI $3.83)
Unrealized gain at end of Q3 of $52M or 2.5x's in 6 months
Someone made a good (short-term) call

John Hjorth

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #2 on: October 22, 2017, 11:09:36 AM »
... eventhough this is a rounding error but it all adds up.

Calls for a smile, ourkid ... - and yes, compounding isen't linear.
ĒIn the race of excellence Ö there is no finish line.Ē
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

Txvestor

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #3 on: October 23, 2017, 07:05:44 AM »
So true. Ask Pabrai 2016 v 2017.
It is linear only when viewed in the rear view mirror. Lol.
« Last Edit: October 24, 2017, 06:23:47 AM by Txvestor »

Saluki

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #4 on: June 08, 2018, 08:54:52 PM »
According to GuruFocus, Prem has sold out his IPI shares at about $4.60. Given that he purchased at $1.20 less than a year ago, it seems like a great score.   Where did this info come from though?  He won't have to file his 13f for a couple of months, so what filing are they getting their info from?

https://www.gurufocus.com/news/693037/prem-watsa-cashes-in-on-intrepid-potash

I'm up about 70% on this (albeit a very small position for me) but I think it's still got room to move up, so I'm holding for now. The water sales should hit $30+ million with 90%+ margins so even at a 10X multiple, it should be worth at least $300mm for the water part of the business.
, and the potash operations are a bonus.  There are some nice NOLs in there, and it's impossible to kill this company because it's the low cost potash producer.

Canada produces more than 30% of the worlds potash and the 2 big companies in Canada sell it worldwide through a government sponsored cartel.

The Canadian producers, have to pay a royalty to the provinces and ship it to the US.  The price they produce it at is a blended rate of their costs from producing through conventional mining and solution mining (pumping water in, taking out the brine and drying it out)

IPI doesn't do conventional mining any more and only uses solution mining, but whereas the Canadians have to dry out the brine by boiling off the water using natural gas, IPI's mines are in the Utah and New Mexico desert, so they just throw it on the floor and let the sun do the evaporation for free.

Shipping is an issue too.  Potash prices fell off a cliff (from ~$900 a ton to ~$180) so it's less likely that you'll get people from Russia shipping there stuff halfway across the world to compete with you on price.  The prices fell because of fracking (you can make an imperfect substitute for potash using natural gas to make ammonia then ammonia to make fertilizer).  Although some crops do okay with other fertilizers, some crops like Corn and lots of fruit need potash because of the potassium, so it will always be around no matter how cheap natural gas is. 

Potash prices are over $200 now consistently, and since no one can make potash cheaper than IPI, I feel like this is the cockroach that can survive anything.  Anyone have any thoughts on this one?
If it's important, do it every day. If it's not important, don't do it at all.  -Dan Gable

globalfinancepartners

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #5 on: June 09, 2018, 07:35:13 AM »
According to GuruFocus, Prem has sold out his IPI shares at about $4.60. Given that he purchased at $1.20 less than a year ago, it seems like a great score.   Where did this info come from though?  He won't have to file his 13f for a couple of months, so what filing are they getting their info from?

They are getting their information from the SEC ->

https://www.sec.gov/cgi-bin/browse-edgar?CIK=IPI&owner=exclude&action=getcompany

The recent SC 13G/A filings show Fairfax reducing to zero.

Before they reduced their holdings below 10%, there were also more detailed Form 4s showing the trading prices ->

https://www.sec.gov/Archives/edgar/data/915191/000094787118000382/xslF345X03/ss90975_4.xml
https://www.sec.gov/Archives/edgar/data/915191/000094787118000394/xslF345X03/ss91496_4.xml

dartmonkey

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #6 on: June 09, 2018, 10:09:46 AM »
Natural gas prices should have no influence on potash prices. Fertilizers basically supply one of 3 needs: nitrogen (N), phosphates (P) and potassium (K). Nitrogen is freely available (air is 80% nitrogen) but you need energy (natural gas) to fix the nitrogen in a form that plants can use, so the cost of N fertilizers is directly related to energy costs. Potash of course is the raw material for K fertilizers, but energy costs are only a small component of its cost of production.

But you canít substitute N for K just because itís cheaper, so falling energy prices should not affect the demand for potash.

Saluki

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #7 on: June 11, 2018, 01:31:14 PM »
According to GuruFocus, Prem has sold out his IPI shares at about $4.60. Given that he purchased at $1.20 less than a year ago, it seems like a great score.   Where did this info come from though?  He won't have to file his 13f for a couple of months, so what filing are they getting their info from?

They are getting their information from the SEC ->

https://www.sec.gov/cgi-bin/browse-edgar?CIK=IPI&owner=exclude&action=getcompany

The recent SC 13G/A filings show Fairfax reducing to zero.

Before they reduced their holdings below 10%, there were also more detailed Form 4s showing the trading prices ->

https://www.sec.gov/Archives/edgar/data/915191/000094787118000382/xslF345X03/ss90975_4.xml
https://www.sec.gov/Archives/edgar/data/915191/000094787118000394/xslF345X03/ss91496_4.xml

Thanks GLOBALFINACEPARTNERS, I didn't realize they were a 10% owner and had to file 3 days after selling.

Thanks DARTMONKEY.  My understanding was that some plants need K, some don't, and some are indifferent, which is why the price drop coincided with falling natural gas prices when fracking became widespread.  If that's not the case, I'll do more research on this and see if the investment thesis still holds up.
If it's important, do it every day. If it's not important, don't do it at all.  -Dan Gable

dartmonkey

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Re: IPI - Intrepid Potash - A new small FFH holding
« Reply #8 on: June 12, 2018, 04:53:42 AM »
I think Nutrien may be quite a good investment, but I donít believe it has anything to do with gas prices, and I donít believe there is any causal connection between the gas price drop 5-6 years ago and the decrease in potash prices.