sl1ck: "First of all, my point was that the Merry Band of Faithful HUN groupies were totally wrong with that cocky hubris and misplaced optimism that HUN was an "investment" when in fact, the stock has always been a trade. Secondly, HUN is now trading like a debt heavy stock in a highly cyclical industry instead of a "story" stock with a "buyout endgame"."
Well, I don't agree with the first statement because the stock was definitely not a always a trade. There have been tradable opportunities (some missed, but certainly not all, but who can foresee these things perfectly anyway? And don't say you can!!!). Your second point seems much more defensible from the perspective of the past 12 months. Can't and won't argue against that.
All that said, the stock is still way undervalued, and while you can opine that the fundamental reason is "debt heavy" - and I'm not convinced that is the reason this stock hasn't blossomed above $20 yet - the actual metrics on HUN that matter are, as always, EV/EBITDA and from that measure HUN is drastically undervalued.
So I wait. And so do many others... yourself still included in the long camp, I presume.
Today is a step in the right direction!
We shall see sl1ck, we shall see. That high made no sense in the context of the company today, did it? Said differently, if HUN was worth $21+ 24 months ago, it's a much better value today.
Changing subjects. You still holding SD? What's your take on CHK and PVA?
You are right, Ed. LIve and learn... but timing those moves would have been impossible. The temerity took place in holding from Dec. 08 through the settlement. Everything since then has been easy - but fluctuating - money.
Steri: I believe I described what the most likely situation was back in January. It was a bullish trade by a large holder who wanted to generate some extra juice on his returns. What was HUN at back then... the mid$17's or something, right? So he made an extra percent or so of return.
The buyer? Could have been the holder (or an affiiiate) or just somebody wanting insurance on a crazy downdraft. Would have been a large holder, in that case, If this were a crazy Russian speculator or something, well, that's just crazy-talk.
Ed, this time she breaks $20 and moves on. That's my prediction!
DV8, that was a long hold just to get out exactly at your basis. #$%$??? Best of success going forward.
Ahhhh, Sl1ck. Not surprised at your continuing curmudgeonliness. Some things are just a given.
The irrefutable facts are that HUN is undervalued as a successful chemical company by any measures, irrespective of your focus on your perception of its "high leverage," which it isn't, particularly (especially in light of its high EBITDA). Correction to your thesis: I no longer know what to think about HUN as a M/A candidate because the brilliant people who follow the company and work there don't seem to want to discuss this any longer.
My rational side tells me the company is SURELY still for sale, and that the Huntsmen would absolutely want to do deal in the $30-ish price range, and that BA is still shopping, and that the golden parachutes set up last year DO, in fact, indicate that they are poised to do something. It's all about timing, of course.
If HUN goes the route of either selling or acquiring TiO2 assets, that's going to be be pretty major development either way for the company. They have the cash and credit to buy something in the $1MMM+ range, or they could sell and get about the same amount of cash.
I'm really not sure what makes HUN a more saleable asset in those two scenarios, but I'd think that being the world's largest TiO2 marketer would be a pretty good position, especially in a rising price environment.
Smorgasbord of thoughts:
1. While I STILL haven't read the transcript of the CC for the AM, I'm presuming that NOBODY on the call asked PH or JH if the company was still being shopped. If that didn't happen, I'm disappointed. Longs' patience is certainly being tried, but if that thesis goes away or at least isn't timely, then YES tthere are better places to make money than HUN right now.
2. Appropos of the last sentence, HUN has NEVER, not one time, had any kind of value recognition favor with the markets or Wall Street.
3. That said, HUN is exceptionally undervalued on every metric imaginable. At some point the stock price will "correct" upwards organically, but - not being cynical, just realistic - I'm CONFIDENT that it will never be valued as much as its peers in any "normal" market. Rather, the only way HUN ever gets to the valuation that we would all appreciate will be if it is ever targeted in another M/A.
4. The cheap money window is still open.
5. It's easy to rationalize a HUN buyout but, if I-banks aren't yet retained and the company is not being actively shopped, nothing other than (contradicted below) a "strategic" sale of assets (TiO2) is likely in the cards.
6. I think the TiO2 should be expanded, not sold off. But I'm not a Chem exec so whatever. I also think that IF HUN chooses to sell, rather than attempt to acquire more capacity for TiO2, that means they are not especially preparing for a sale of the company as a whole. Of course this is a guess, but I'd think that selling off TiO2 and that gravy train in exchange for - perhaps? - expanding Methanol or specially chem growth, that's just more risk and indicates a commitment to a longer haul.
7. Last, I consider HUN safe money for now and have trimmed some, but will hold for probably at least into 2014 because I believe it will hit the mid-$20s and I own a bunch of very long call options.
PS - Dittoes, I knew you are not Howbout. I guess I packed too many thoughts into that one paragraph and made it seem that way.
Having read that complete article, you are certainly correct that it could go either way. If HUN divests itself of TiO2, that will be a pretty big flip/flop from the days of the TROX bid.
Apparently, there's good money to be made in..... Methanol (thank God it's not Ethanol!! ;^)
Having read and digested the whole bit of commentary provided by PH and written in that news story, I'd have to believe if "normalized" EBITDA for TiO2 is $200MM, then - were HUN to sell it's TiO2 - they should be able to get at least 6X EBITDA... hopefully more. Contrariwise, if they bought Rock's (or even some of DD's) TiO2 assets hopefully they could get them cheaply.
TiO2 is a money maker and the bottom is in and past at this point. Should be interesting. This is a major, transformative crossroads for HUN. Ever since the Apollo settlement, they have talked about "bolt on" acquisitions and etc. that are instantly accretive to earnings being a priority. This could be it since the timing in the TiO2 markets is favorable (for an acquisition). Going the other way - divestiture of TiO2 - I have much less of a perspective on. PH says Methanol is where it's at? Well, alrighty then. If dumping TiO2 makes HUN a more attractive B/O target, great. But it seems a bit more of a reach.
Wow, that was a mouthful dittoes. Or is it dittos? The Dan Quayle factor at work. Howbout, if you didn't abandon the US back when Quayle was one step away from the Presidency, you shouldn't be in Uruguay now because of Barry. But I digress....
I'm not sure that your interpretation of this PH quote is correct. Seems to me PH is suggesting that HUN would want to be on the buy-side of any TiO2 opps out there. Recall, they tried to get TROX out of BK a few years back and failed. If they could, for instance, buy DD's TiO2 assets they would be the world's TiO2 king.
TiO2 is just passing through a trough. If there are skittish sellers or simply those looking to exit the business, HUN would be interested in that.
TiO2 is a simple, commodity-in-essence business and everybody seems afraid of the Chinese right now. Such a threat! (not really...) TiO2's day in the sun will return, sooner than many think. Plus, if it gets used for other purposes than its primary purpose which is almost exclusively as a whitening pigment/agent, there's a bright future (pun intended) especially for whomever is "king."
That all said I'd be curious if any acquisition opportunities actually materialize.
The other thing about TiO2 is that even in a down and dirty cycle bottom - like the past 9 months - Tio2 makes money. Specialty chems are very expensive to produce. Competing all-out in that area would take lots of time, CapEx and/or very shrewd and - frankly - outright lucky acquisition(s). This last option is probably not even an option. If HUN sold it's Tio2 biz, which I didn't think from that quote that PH was intimating, and took whatever proceeds and looked to go much more performance or specialty chem, it would be a lot to expect that they could do so adroitly (haven't used that word in ages!!).
The 800# gorilla in the room (somewhere) is that they want to sell this company. I don't think plowing in that direction would indicate a sale was planned any longer.
Diversification can provide great moments like that.... HUN is still a big part of my long mix. I'm thinking things look pretty good right now.
PWE? is that the teenie bank stock from years ago? how's it making out?
I dunno. HUN is not the overlevered monstrousity it was a few years back. Business has been very robust and they are in all (most of) the right areas and - as really needs to be remembered - in M/A valuations (or really ANY valuation) it's all about EV:EBITDA to determine what is over and what is undervalued. And by that measure, HUN is still awesomely undervalued.
I wouldn't base my sentiment on HUN on whether or not Lind or some of the others are still around. I think YHOO had alot to do with F'ng up this message board and the interest that people have in participating. It STILL sucks, if you ask me.
Sl1ck! You are alive and well, obviously, as you are as cantankerous as ever re: HUN.
Yeah. So your's is a good question, but - as we have all learned too many times - HUN will zig just when you think it should zag, only to zig at a later time. That's the story right now. I'm CONFIDENT.
$20+? Sure. A buyout?? I'm not so sure and really hope this question is asked about dispositively at the AM, which is but a month away (in TX).
Yeah lots of cities could benefit if there was a significant cleansing effect. Dunno what the efficacy is ya know?
Only problem with this, N, is that in the very same breath the article mentions the unmentionable: ALCOA (AA)!!