Alex Roepers Long Owens Illinois, Huntsman, G4S: Capitalize For Kids Conference 2018

We're posting up notes from the Capitalize For Kids 2018 investment conference.  Next up is Alex Roepers of Atlantic Investment Managment who pitched three long ideas: Owens Illinois (OI), Huntsman (HUN), and G4s (GFS.L).


Alex Roepers' Capitalize For Kids Presentation: Three Long Ideas

•    3 High conviction value stocks

•    Owens Illinois
o    Third time pitching this
o    Largest maker of glass bottles in the world
o    25% global market share
o    Grown 20% despite largest segment shrinking 4% a year
o    Very stable, luxury product is put in glass bottle
o    Taking mega-beer capacity to craft and specialty bottles
o    $400mm FCF, has $100mm annually in asbestos payments
o    Pushing on major corp dev move
•    Sell EU biz 8x EBITDA
•    Use to cut debt in half, use rest to buyback stock
•    With that, can get to $42 share price in 12-18 months
o    All of the negative impact is multiple compression despite earnings power growing, lower debt, etc
o    Talking to financial sponsors, Koch industries, BRK, trying to put fire under their ass
o    15 % global fund position, 25% US fund


•    Huntsman
o    168% upside
o    5.4x PE, 5x EV / EBIT
o    $55 target price
o    Taking their most cyclical business (Venator) public, paid down debt
o    Went from $23 -> $35 and has sold off
o    Fears around their product
o    Downstream, differentiated, not as effected by the spot price changes
o    6% organic growth in polyurethane, great biz
o    Own 53% of Venator – listed spinoff
o    Roadmap to $4.40 EPS by 2020


•    G4S
o    One of the big security contractors. For corps, embassies, airports
o    3-5 year contracts, price escalators
o    Tech components, camera, software, etc which is higher margin
o    9.3x PE
o    Target Price £3.9, 85% upside
o    #1 or #2 player in cash delivery solutions (think Brinks truck)
o    They have a contract with WMT for cash close that saves them two days from cash close at store level to delivering to bank acct at head office
•    Target also starting a pilot
o    Grow 360 cash biz then take it public at scale at high multiple
o    High quality business


Be sure to check out the rest of the presentations from Capitalize For Kids 2018. 

Insider Buying: CEO's Buying Stock En Masse

There has been an increased amount of insider buying over the past few days. But what caught our eye in particular was the vast amount of CEO's that were buying.

To pull all this data, we used Insider Trade Reports who says that "over four decades of academic research has shown that by following in the footsteps of company insiders and buying the stocks that they are buying, you can outperform the market by 6% to 10.2% per year."

As CEO's bought into the recent market sell-off, it's clear they believe the market was undervaluing their companies.

List of Recent CEO Insider Buying

- Six Flags Entertainment (SIX) CEO buys $2,499,189 worth

- Morgan Stanley (MS) CEO buys $2,062,070 worth

- Fifth Street Finance (FSC) CEO buys $2,014,323 worth

- Huntsman (HUN) CEO buys $1,137,270 worth

- WMS Industries (WMS) CEO buys $1,000,224 worth

- General Growth Properties (GGP) CEO buys $856,489 worth

- Kinder Morgan (KMI) CEO buys $679,621 worth

- First Industrial Realty Trust (FR) CEO buys $642,000 worth

- Winthrop Realty Trust (FUR) CEO buys $589,550 worth

- Tupperware Brands (TUP) CEO buys $507,045 worth

- Life Technologies (LIFE) CEO buys $420,000 worth

- Greenbrier Companies (GBX) CEO buys $268,705 worth

- Kansas City Southern (KSU) CEO buys $253,050 worth

- AK Steel (AKS) CEO buys $199,030 worth


We're proud to announce that Market Folly readers receive a special 33% discount on Insider Trade Reports' annual subscriptions and a 25% discount on monthly & quarterly subscriptions.

You can choose how often you receive insider buying/selling alerts (daily, weekly, high conviction reports) which is a great feature. They also have a proprietary scale that measures the significance of each transaction with commentary to provide context.

We've been using Insider Trade Reports for months now and it's a very useful resource for investors so take advantage of the discount.