market folly

We're posting up notes from the Capitalize For Kids 2018 investment conference.  Next up is Ed Garden of Trian Fund Management who pitched a long of PPG Industries (PPG).


Ed Garden's Capitalize For Kids Presentation: Long PPG Industries

PPG Industries

•    Paints and coatings business
•    Great business, 40% upside on SOTP
•    No tech disruption risk, AMZN risk, private label risk. Strong moat
•    We are facing an inflationary time, great time to buy as they pass on inflation, increasing gross margin
•    Terrible management, lost key customer (Lowe’s), Materially underperforming peers, market on all metrics, Profit warnings, shrinking earnings while peers are growing earnings
•    Accounting issues, May 2018 – says 10-K can’t be relied upon due to expense accrual issues
•    Did a stupid Hostile acquisition, massively flawed strategy

Trian's Solution

•    Bring back legendary CEO Chuck Bunch
•    Best CEO in coatings, never sold his stock, wants to return
•    Had 40 year career at PPG.  Large growth in North American Architectural. Needs Capital and Attention
•    Wants it to be spun off
•    Add leverage to business
•    Improve Governance
•    Chuck had outperformed peers by 4,700bps over tenure    


Be sure to check out the rest of the presentations from Capitalize For Kids 2018.