Street Capitalist: Event Driven Value Investments

Meryl Witmer is a value investor who regularly participates in Barron’s roundtables. Today, I came across a video interview with her and thought it would be worth sharing:

If you’re too lazy to watch the video, brief notes are below:

-a whole lot of things that are cheap now, it’s a “new world” for value investors.

-Remember a line from Warren Buffett: You should detach from the market emotionally, but pay attention to opportunities as they arise. That’s what you should try to do now.

-Proposes the following investment idea: Kaiser Alumnium Corporation (NASDAQ:KALU)

-Originally purchased Kaiser at $35/$36 a share. Sold in the $70s. Now the company is back to $25. They make the aluminum sheet metal that goes into industrial products, airplanes.

-Kaiser’s book value, hard book is $50 per share. $10 per share is NOL carry forward (loss). Stock is $25 with $50 book. Replacement cost for their rolling mill would cost $1.5 billion dollars to replace + $200 million value of NOL. Might be worth $1.7 billion.

-No debt, no legacy costs due to bankrutpcy. Market cap is about $500 million.

-Should earn 3.50 to 4.00 a share in an OK environment. If Boeing gets going and planes sell, it should make $5 per share. Worst Case $2.50 per share of fully taxed earnings + $10-12 per share of NOL value..

-Minimum trading price at $35 vs $25 with upside to the $70s

-Why has it traded down? Forced liquidiations by hedge funds. No good fundamental reason.