发帖
雷达卡
Specialty Chemicals
THEME
2009 Outlook, It's Going to be a Wild Ride
Looking at 2009, we expect quite a wild ride in the specialty chemical space with a
significant amount of volatility in many of the names’ businesses, end-markets, raw
materials and of course the stocks. What will make things even a bit more difficult is that
while the market has been very macro focused, and we believe that will continue, we
believe investors will need to be very stock specific to make solid returns in the specialty
chemical group.
In our 2009 Outlook report, we have highlighted some of the issues that we believe will
drive the group including the global economic outlook, raw materials, FX, etc. In addition
to the usual topics, we have also highlighted a number of other “hot topics” in the
investment community and how they may or may not impact the space including: access
to capital, M&A, and the proposed U.S. government stimulus packages.
With all of those things in mind as well as the balance sheets/cash flows of our
companies, we believe the specialty chemical group will at least modestly outperform the
broader market but investors will be best rewarded by taking a barbell approach to
investing in the group in 2009. On one end, we think some of the oversold Best in Class
Names that are high quality companies with excellent business models, limited and/or
disciplined competitors, solid cash positions and/or balance sheets and stable cash are
offering “once in a decade” opportunities—our favorite in this category is ECL. On the
other end of the barbell, we have the Swing for the Fence Names that have good/great
businesses platforms (in many cases like the Best in Class names) but have some “hair”
on them whether it is high debt levels and/or potential covenant issues, extremely
depressed end-markets, limited free cash generation or a combination of these but don’t
have a “going concern” issue—our favorite in this category is ROC.
Thesis Summary
Looking at 2009, we expect quite a wild ride in the specialty chemical space with a
significant amount of volatility in many of the names’ businesses, end-markets, raw
materials and of course the stocks. What will make things even a bit more difficult is that
while the market has been very macro focused, and we believe that will continue, we
believe investors will need to be very stock specific to make solid returns in the specialty
chemical group.
In our 2009 Outlook report, we have highlighted some of the issues that we believe will
drive the group including the global economic outlook, raw materials, FX, etc. In addition
to the usual topics, we have also highlighted a number of other “hot topics” in the
investment community and how they may or may not impact the space including: access
to capital, M&A, and the proposed U.S. government stimulus packages.
With all of those things in mind as well as the balance sheets/cash flows of our companies,
we believe the specialty chemical group will at least modestly outperform the broader
market but investors will be best rewarded by taking a barbell approach to investing in the
group in 2009. On one end, we think some of the oversold Best in Class Names that are
high quality companies with excellent business models, limited and/or disciplined
competitors, solid cash positions and/or balance sheets and stable cash are offering “once
in a decade” opportunities—our favorite in this category is ECL. On the other end of the
barbell, we have the Swing for the Fence Names that have good/great businesses
platforms (in many cases like the Best in Class names) but have some “hair” on them
whether it is high debt levels and/or potential covenant issues, extremely depressed endmarkets,
limited free cash generation or a combination of these but don’t have a “going
concern” issue—our favorite in this category is ROC.
287666.pdf
(562.2 KB, 需要: 500 个论坛币)
京公网安备 11010802022788号
