market folly

We're posting up notes from the Capitalize For Kids Sohn Canada conference that just took place.  Next up is Alex Roepers of Atlantic Investment Management who pitched 3 long ideas.


Alex Roepers' Sohn Canada Presentation

Looks to enter positions 7-8x EV/EBIT and close 10-12x EV/EBIT. Usually has a 12-24 month holding period but is a case by case basis. Considers the firm a gentle activist. Usually does not look to make too much noise (took a jab at some more public activist investors). Always has a plan ready once a position is taken and looks to work with management, if not, then work with the Board.

First pitch was LONG Owens-Illinois (OI). They are a glass bottle maker (the standard in most spirits). Price target $45 within 12 months (~71% upside from Friday’s close). Said it was un-economical to ship more than 300 miles which is why there is a need for plants to optimize distribution. The factories have an estimated replacement value of $13B. Believes can earn $3.25/share in 2014, target based on 14x 2015 EPS. The recent sell off has created an opportunity to get back in to the stock (has traded the stock since the firm’s inception in 1992).

Next, pitched LONG Triumph Group (TGI). Has a price target of $100 within 24 months (~62% upside from Thursday close). Should trade about 11x 2016 EPS. Operational improvements, share repurchases and M&A will lead to solid EPS growth.

Lastly, pitched LONG Harman International (HAR). Has a price target of price target $141, (~46% upside from Thursday close). The “infotainment” segment has 24% global market share and penetration is very high in car audio (10 out of 15 leading brands use Harman when). Was puzzled as to why Google or Microsoft hasn’t bought them yet. Lots of cross-over with a consumer focused and respected brand. A multiple year phase of 30% EPS CAGR, should allow return to higher multiple (14-15x) in 2016. Believes it could earn $7 2016 EPS.

Be sure to check out the rest of the presentations from Capitalize For Kids Sohn Canada here.