Alex Roepers Long Owens-Illinois, Eastman, Harman: Capitalize For Kids Conference ~ market folly

Monday, October 31, 2016

Alex Roepers Long Owens-Illinois, Eastman, Harman: Capitalize For Kids Conference

We're posting up notes from the Capitalize For Kids conference 2016.  Next up is Alex Roepers of Atlantic Investment Management who pitched three longs: Owens-Illinois (OI), Eastman (EMN - spin-off from Kodak), and Harman (HAR).

Alex Roepers' Presentation at Capitalize For Kids Conference 2016

•    LONG Owens-Illinois (OI), largest maker of glass in the world. Wine, beer, liqueur.

•    Overall, industry has suffered from substitution from plastic and cans. But it is relatively stable.

•    This is the winning consolidator, has 80 plants with each plant having a $200 million investment. They operate local duopolies since it is uneconomic to ship glass far distances.

•    Has great customers (Heineken, Pernod Ricard, etc), no technological obsolescence, no foreign competition.

•    Believes stock price dropped as earnings has been impacted from strong USD (70% of sales outside of US).

•    LONG Eastman (EMN). Spinoff from Eastman Kodak.

•    Over 75% of the business is now speciality chemicals with sold margins and growth.

•    Believes it can earn $8 to $9 cash earnings per share. Currently trades at $66.

•    Have recently paid off debt and now are focusing on repurchasing shares and could be a takeout candidate.

•    LONG Harman (HAR). Manufacture entertainment systems for cars and do professional services (for concerts, stadium, etc). Top 12 out of 15 car companies are their customers.

•    Has followed the company since the 1990s. The company transitioned from audio to consumer to audio for business (car companies, professional services, etc).

•    KKR has previously bid on the company in 2007 but deal fell apart leading into GFC. Has recently sold off due to china slowdown, peak auto sales, etc.

•    Believes it has strong end-markets and the company has recently posted solid results.

Be sure to check out the rest of the presentations from Capitalize For Kids/Sohn Canada Conference

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