Friday, January 31, 2014

Published on Seeking Alpha: Underperforming Olin Corporation Needs To Be Acquired

"Olin Corp. (OLN) reported fourth quarter 2013 earnings on Monday meeting analysts' estimates and tallying up record annual EBITDA of $424 million. While this is a notable achievement, management indicated first quarter EPS well below the consensus forecast and EBITDA for 2014 at best equal to 2013's performance. Meanwhile the company continues to laud itself for its increasing cash balance (up $143 million during 2013 to $308 million at the end of the year), continuing its 20 cent per share quarterly dividend (which has not been raised since 1999), and repurchasing 1.5 million shares during the course of 2013 (1.9% of shares outstanding for perhaps $40 million or 10% of EBITDA). Based on Monday's closing price, the company trades at EV/EBITDA of approximately 6 times and has done so for some time. Despite their multimillion dollar compensation, management together with the board owns a trivial amount of the company giving them little incentive to do much beside collect their pay and options grants. Olin is ripe for an activist to shake things up or a buyer to emerge to unlock the company's value."

The above is an excerpt from my recently published article on Seeking Alpha.  To read the whole thing, go here:

Author's note: Now that I am no longer subject to the numerous restrictions related to my prior employment, I have started trying new things professionally.  I submitted an article to Seeking Alpha which they selected for publishing as a "Small-Cap Insight."  I intend to split content in the future between this blog and Seeking Alpha, assuming they like my stuff enough to publish it.

As always, the linked article is for your entertainment only rather than investment advice.  Consult your advisors, do your own due diligence, take your own risks, and be careful with your money.  I am just some over-educated boob on the inter-tubes: what do I know?

Monday, January 27, 2014

The Not So Tender Offer: What To Do When Your Bond Is Called Early

And Why You Should Almost Always Accept The Offer

As I mentioned in a recent post about the high yield bond market (, junk bond issuers have been taking advantage of the lower rates and easy terms available to them in the new issue market.  When existing junk bonds are refinanced, sometimes the issuer will simply exercise the call option embedded in the bonds (usually at a fixed price that starts at par plus 6 months of coupons and declining as the bond nears maturity).  However, often junk issuers wish to refinance their bonds before the call date has arrived or their lawyers are worried about the possibility of a technicality in the existing bond covenants that may prevent them from issuing new bonds to refinance the old ones.  When this happens junk issuers will initiate what is known as a "tender offer" to get the owners of the existing bonds to go along with their intended refinancing.  Unfortunately, there appears to be some confusion on the part of retail bond owners about the best course of action when confronted by a tender offer.  This post is about what to do if you own a bond that is the subject of such an offer.

Wednesday, January 22, 2014

High Yield Market Looking Overvalued And Underprotected

The high yield (AKA junk) bond market is a funny thing.  Everyone who invests in this asset class knows they are buying IOUs from higher risk issuers who offer extra interest and extra restrictions on what the issuer can do in order to compensate the investors for the higher risk.  Sometimes investors are more concerned with the extra risk involved and sometimes they are more interested in the extra interest offered.  But relatively few junk investors seem to look beyond the rating and the yield, and almost all seem to have very short memories.  The junk market appears to me to be approaching an extreme and I would caution anyone tempted to chase yield in this market to be very careful.

Thursday, January 16, 2014

A New Chapter

A couple years ago I started this blog partly as an experiment and partly as a way to formalize and expand on my investing notions by putting them into print.  A few of you were good enough to read my ramblings and even comment on them, for which I am grateful (spammers aside).  However, I was greatly hampered by a need to maintain anonymity and I felt the need to avoid a number of topics due to the nature of my employer.  As of today, I am no longer subject to those constraints.  I can come out of the shadows and comment on whatever I like.  I will also have the time to cover some new topics, perhaps surface some new investment ideas, and revisit some old post topics that are worthy of further discussion.  I intend to submit some work to Seeking Alpha as well and plan to experiment with both exclusive and non-exclusive listings on that venue.

First, a bit about me.  I have been an active investor since 1998.  I am a CFA charterholder and hold an MBA from NYU-Stern.  Over the last 20 years I have been a bank and insurance company regulator, a hedge fund securities analyst, a ratings agency analyst and a consultant.  Going forward I intend to pursue such business and investment opportunities as may present themselves while amusing myself and hopefully my readers.

I look forward to digging up new opportunities to share with my readers and offer up whatever meager knowledge I have accumulated for your education and amusement.