Justin Hess
Long/short equity, contrarian, special situations, small-cap

LSB Industries: Still A Short

Overview of Idea

LSB Industries (NYSE: LXU) has lost significant shareholder value this past year. The stock is down ~80% YoY, and its bonds are currently trading at ~$0.80 on the dollar. Beyond being a value trap for activists, the firm has faced a string of macroeconomic and operational headwinds. LSB is operating with a significant debt burden (8.9x Net Debt/EBITDA as of September 2015 up from 4.9x in June 2015), and there has been a recent shakeup in management this past fall with the former CEO, the founder's son, stepping down. The bull argument is that if the company can weather the current storm under new leadership, it can begin to repay its debt and eventually split into

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