Phaceliacapital Posted July 11, 2013 Share Posted July 11, 2013 Hi all, I stumbled on the following article: http://www.theglobeandmail.com/globe-investor/lumber-supercycle-could-spell-opportunity/article12590017/ which I thought was rather interesting, haven't done a lot of research on it yet but already took a quick look at Ainsworth (given it was the only company with an A and I wanted to start arbitrarily) and looks like it might be an interesting case. Low cost and leading manufacturer of Oriented Strand Boards (https://en.wikipedia.org/wiki/Oriented_strand_board), most often used in construction (roofing, flooring, etc) ==> So heavily impacted by construction (mostly housing I guess) outlook Geo. Diversified: 72% US (still large) 18% Canada and around 10% for Japan and ROTW ==> Despite Yen weakness no strong impact (mentioned in 2013Q1 CC) Due to higher OSB pricing EBITDA margins went from 11% to 44%, and capex looks to currently be high due to startup of High Level mill, after which I expect capex to substantially decline to the "maintenance" level, (Do note, I still have to look further into this) Although very subjectively (only read 1 CC) the management seems to be capable and prudent Happy to hear your thoughts on the lumber industry in general, or one of the companies mentioned in the globeandmail article? Besides West Fraser, other prominent names in the sector are Canfor Corp., International Forest Products Ltd., and Ainsworth Lumber. For the more speculatively minded, there are also lumber futures in the United States. Some additional links on possible future for wood used in "greener" construction: http://www.economist.com/blogs/babbage/2012/08/building-materials#comments http://www.economist.com/blogs/babbage/2013/07/tall-buildings Thanks in advance and happy investing Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 11, 2013 Author Share Posted July 11, 2013 According to BB it is currently trading at around 9-10% FCF yield (still to check) and Brookfield AM owns around 55%, FMR has a large chunk and Scopus AM is also involved (very small stake and never heard of them so probably little value added). Link to comment Share on other sites More sharing options...
ValueBuff Posted July 11, 2013 Share Posted July 11, 2013 brookfield owns a large chunk as they spun it out. ANS was recapitalized by brookfield. Very cheap name, in the correct industry. This mill they are starting up will greatly increase output and lower their overall cost structure. I have own ANS for 3 months and plan to hold for a while. Link to comment Share on other sites More sharing options...
A_Hamilton Posted July 11, 2013 Share Posted July 11, 2013 I did a call with these guys right before OSB prices doubled. I was asking all kinds of questions about the company and they started asking me whether I was interested in the company's equity or debt. I said the equity and they sounded floored, I don't think anybody had considered the possibility that the company could continue on much longer without prices increasing or a substantial reorg of the capital structure. Anyway, I couldn't find a way to buy in the volume I needed and I just didn't do it...#regrets Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 12, 2013 Author Share Posted July 12, 2013 Does that mean you consider it no longer cheap at today's prices? Link to comment Share on other sites More sharing options...
Gamecock-YT Posted July 12, 2013 Share Posted July 12, 2013 Looks like someone just put a write-up on VIC for Ainsworth. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 12, 2013 Author Share Posted July 12, 2013 With a buy or a sell? Link to comment Share on other sites More sharing options...
A_Hamilton Posted July 12, 2013 Share Posted July 12, 2013 Does that mean you consider it no longer cheap at today's prices? Not necessarily...I just have other wood products holdings that I like better. Link to comment Share on other sites More sharing options...
Gamecock-YT Posted July 12, 2013 Share Posted July 12, 2013 With a buy or a sell? buy. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 12, 2013 Author Share Posted July 12, 2013 Any chance for the write-up? Or am I crossing boundaries just by asking :D? Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 12, 2013 Author Share Posted July 12, 2013 Not necessarily...I just have other wood products holdings that I like better. Care to elaborate? Link to comment Share on other sites More sharing options...
Phaceliacapital Posted September 5, 2013 Author Share Posted September 5, 2013 http://www.4-traders.com/AINSWORTH-LUMBER-CO-LTD-1409012/news/Ainsworth-Lumber-Co-Ltd--LP-Agrees-To-Acquire-Ainsworth-Advancing-Its-Global-Leadership-In-Stran-17240724/ Link to comment Share on other sites More sharing options...
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