Trinseo: Biggest Dislocation Puts The Bottom In Place

Aug. 10, 2022 3:22 PM ETTrinseo PLC (TSE)CE310 Comments
Prati Management profile picture
Prati Management
3.77K Followers

Summary

  • The quarter was weak (this was widely expected). The news bears seized upon was that the magnitude of the guide down for H2 was bigger than expectations.
  • The 40% decline last quarter from ~$50 to ~$30 has been painful for shareholders of TSE, but for long-term investors, it provides an excellent entry point. The upside potential remains huge.
  • The weakness in the guidance comes mainly from destocking, largely from stay at home goods like consumer electronics and appliances. This issue is transitory.
  • The yield curve is already starting to reverse the inversion today with a nice steepening move this morning on the back of the CPI.
  • Every day that goes by, more weak hands disappear, and more shares are bought back. The setup for buying this name is detailed below.

Woman squeezing the juice from a lemon.

courtneyk

Making Lemonade And Squeezing All of the Juice

I maxed my position in Trinseo (NYSE:TSE) yesterday. The company had back-to-back bad news for investors so, between traders selling absent an imminent catalyst and shorts pressing on a weak quarter and a

This article was written by

Prati Management profile picture
3.77K Followers
Richard Prati has nearly 40 years of equity analysis and investment experience and spent nearly 20 years on Wall Street in various positions including the co-founding of American Technology Research and ultimately selling the company in 2008. Experience in public and private global equity analysis and investing. BS in Economics from Vanderbilt and MBA from the University of Rochester.

Disclosure: I/we have a beneficial long position in the shares of TSE either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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