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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (39665)	10/17/2010 2:42:47 AM
From: Spekulatius	Read Replies (1) of 78744

re OI - interesting enough, Barron's has a piece about OI (Bottom's up". Barrons article mentions their valuation, emerging market exposure but does not mention the asbestos liability. This is not a small omission; last year, OI paid ~180M$, before it was ~250M$ and in 2006/2007 ~ 120M$. you would think that considering they got out of the asbestos business in 1958, the claims would run off but so for it seems that they are on track for another 180M$ in 2010. Well, these are pre-tax expenses of course but I think the NPV of the asbestos claims post tax is at least 1B$. Considering that the EV value of OI is ~7.4B$ (which does not account for the asbestos liability), that is not exactly a rounding error. if I assume an adjusted EV of 8.4B$, most of the valuation discount to peers is gone.

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