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Tau
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As a small investor focusing on value investing, I am trying to build my portfolio so that I can start my own investment firm. I started few years back and I think I am on the right track so far.
My company:
Quinnipiac Capital
  • Mr. Market Is Right About ALB ROC Deal? 3 comments
    Aug 13, 2014 3:18 PM | about stocks: ALB, ROC

    ALB recently announced a cash and stock deal to merge with ROC. A couple of contributors have written good articles about the deal and why ALB looks like overpaying. I just want to share with you what I have been thinking and would like to know your thoughts on this.

    So let us go back to the point just before the deal was announce for a moment. ALB EV was about 6.1B and ROC was about 5.5B, including cash and debt as of Q2 2014. Now the market is valuing ALB 5.1B and ROC about 5.6B. EV of the two combined decreased from 12.6B to 10.6B. Could the same have happened if they announce to raise 3.5B for share buyback?

    If the deal go through, ALB could have EBITDA around 900m - 1b and owner earnings around 700m - 800m including interest expenses. ALB could also be able to grow at mid to high single digits more consistently after the integration. A conservative estimate of intrinsic value including debt would be around 12B. Management already have plan in mind to pay down debt after the merger with strong cash flow. There is a lot of upside potential in intrinsic value.

    If the deal does not go through (not likely, but a possibility), the market could reward ALB a relief rally back to 70s? Maybe.

    What you guys think? I am long ALB.

    Disclosure: The author is long ALB.

    Stocks: ALB, ROC
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Comments (3)
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  • scotch64
    , contributor
    Comments (26) | Send Message
     
    ALB recent activity does not seem to get much exposure , more so in regards to ROC.
    http://bit.ly/1AQzNp6
    Is this article comment good/bad?
    Could you or SA consider con't follow thru on ROC, ALB stocks?

     

    Bought ALB at 61 after the ROC announcement and watched it flop like a fish. , no real movement. $70 seemed like fruition but not at the current pace. I'd like to be long but I need a short term solid pivot point / mitigate market flux.
    26 Aug 2014, 08:26 AM Reply Like
  • Tau
    , contributor
    Comments (36) | Send Message
     
    Author’s reply » Thanks for commenting Scotch64. Sorry that I could not get to this earlier. I am also in ALB after the sell off around 61. I think value will be realized after the market sees what the combined entity look like and what kind of growth it can achieve. The consolidation of specialty chemicals will probably continue, especially in high growth areas like Industrial side. Another name that could be worth looking into is CHMT, which just sold Ag business and will focus on Ind only.
    9 Sep 2014, 10:45 AM Reply Like
  • scotch64
    , contributor
    Comments (26) | Send Message
     
    Tau, I do believe traction is coming , gut feeling tells me following the Lithium trail is what stands out the most to me. There seems to be a lot of ALB re-focus starting w/ the ROC acquisition , ROC is selling off portion of it's business in other metals to Huntsman, ALB selling off something to do with aspirin, ALB partnering with Co. to manufacturer new flame retardant ... is this for EV /lithium batt protection ?
    Is ALB capable of mass refinement and production of lithium needed by Tesla? There's a very logical reason why Tesla has chosen Nevada.(Lithium) . There's a very logical reason why ALB bought ROC.
    Other article links:
    http://bit.ly/1lQ6zmR
    I'm sorry I'm not more insightful w/ facts ,but do see a bigger picture possibly unfolding here.

     

    Appreciate your comments as well.
    9 Sep 2014, 11:32 AM Reply Like
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