Compass Minerals (CMP): Who Says Salt Mining is Boring?

Compass Minerals (CMP): Who Says Salt Mining is Boring?

Ben Claremon from Cove Street Capital talks on Compass Minerals International, Inc. (NYSE:CMP)

.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; }

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q1 2021 hedge fund letters, conferences and more

[embedded content]

Investing in Emerging and Frontier Markets with EMQQ’s Kevin Carter

Yarra Square Investing Greenhaven Road CapitalValueWalk’s Raul Panganiban interviews Kevin Carter, founder and CIO of EMQQ and is the CEO of Big Tree Capital LLC, and discuss his approach to investing and why investor’s should look into emerging and frontier markets especially in E-commerce and Mobile Technology. Q1 2021 hedge fund letters, conferences and more The following is a computer Read More

Compass Minerals: An Underappreciated Company

In recent years, Compass Minerals (ticker: CMP) has remained an underappreciated company. Our research suggests, however, that aside from the variability in weather that impacts the company – the primary reasons for concern are abating.

The prior management team misallocated capital into unnecessary capital expenditures and an ill-advised acquisition of a Brazilian company. The margin issues, lack of free cash flow generation, and the increased leverage that resulted from this poor capital allocation have obscured the quality of the company’s asset base. Specifically, within its Salt segment,

Compass owns the largest rock salt mine in North America and remains a leader in salt production for de-icing, consumer, and industrial uses. The company also, within its Plant Nutrition segment, is the only U.S.-based supplier of sulfate of potash, a chloride-free fertilizer that is used in higher-value crops.

The industry structure surrounding the businesses in both segments is very favorable and this leads to high margins and a certain level of pricing power. These are irreplaceable assets that would likely fetch very high multiples if they were up for sale. However, even if the assets are not put on the block, the moves taken by new CEO Kevin Crutchfield are likely to improve margins further, de-lever the balance sheet even more, and improve the productivity of the assets.

While the stock is not dirt cheap at the current valuation, our research suggests that this is a business that is getting more valuable every day and thus has the potential to compound over time.

Author: Ben Claremon of Cove Street Capital

Article by Investor Summit Group

Comments are closed.