High-flying IPO’s…………… Emerged from Bankruptcy
Trending on Stocktwits…..“No tweet results found”
Virtual Goods………………. Synthetic fluids in aviation to support war efforts.
- Chemtura isn’t the flashiest company in the world, nor will it ever be. There will be no triple digit revenue growth, 10% intraday stock movements are unheard of, and their CEO likely does not only eat what he kills.
- By the end of this brief pitch I believe many of you will see an under the radar firm that abounds with embedded value driven to success by a top-tier management team.
Chemtura is a multi-national specialty chemical company with manufacturing efforts in over 30 countries, and sales in another 100.
History: The recent history Chemtura is brief as it emerged from bankruptcy in late 2010 after an unfortunate combination of a 2008 cyclical decline in business and an expiration of credit facilities.
6 Reasons to Love Chemtura
- Highly Incentivized Management- Management has strong option based incentives to hit FY11 EBITDA guidance of ~$400mil.
- Experienced Team- CEO Craig Rogerson previously ran Hercules, which sold to specialty chemical company Ashland. All indications point to a management team that is willing & unafraid to sell parts or all of the company to maximize value.
- Post Bankruptcy Turnaround- Operational efficiencies (including recovering demand in oil, gas, insulation, and furniture foam), cost cutting, and incremental capacity all provide opportunities for Chemtura to meet or exceed guidance.
- Margin Expansion: The industrial performance & industrial engineering segments are both projected to have rapidly expanding margins due to pricing power in petroleum additives and flame retardants. 1. Large part of the petroleum additives segment (industrial performance) are ADPA’s which are additive components used in transport and industrial lubricant applications. These help meet rising regulatory mandated standards for engine performance and emissions as well as consumer demand for improved gas mileage. 2 Brominated Performance Products- These products efficiently remove mercury emissions as part of the coal industry. Clean coal technology has come under renewed focus due to regulatory scrutiny on emissions.
- Lack of Sell-Side Coverage: There is currently no sell-side research coverage on Chemtura. This story is currently under the radar and should gain traction as coverage is initiated.
- Smart Money Investors: Notable investors such as York Capital & Canyon Capital have large stakes in Chemtura.
Disclosure: Long Chemtura
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