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Strategies & Market Trends : Fundamental Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (2082)	7/30/2012 12:12:03 AM
From: Sergio H	Respond to of 4719

On ROC, I spent a lot of time studying this co. You're not going to get the full picture from looking at charts, graphs or numbers. I am glad it holds up looking at it on that basis, and that was my final test prior to recommending it. I don't dwell on the numbers because they are available for anyone to look up. ROC has done a fantastic job of reducing debt while increasing their production facilities. The free cash flow has enabled them to establish a dividend and the dividend is very shareholder friendly. There's a lot of good stuff going on with this co. and some of it is in my write-up. You can do your own research or read my write up if you are interested -------------------------------------------------------------------------------------------------------------------------------- Rockwood Holdings was created in 2000 and became a publicly traded company in 2005. It develops, manufactures, and markets specialty chemicals and materials for industrial and commercial applications, primarily in the U.S. and Germany. Rockwood is the top producer in the world of Lithium compounds and chemicals. HIGHLIGHTS: ROC is selling at under 9 times forward earnings, a deep discount to its five year historical average (15.9). The company strategy has been not to sell more, but to sell at high margins. Their lowest margin division is their TiO2 segment. Besides raising prices, announced last week, the company has hired the investment banking firm Lazard for advice on strategic options such as sale or IPO of the business on the Frankfurt Stock Exchange. Management believes that TiO2 is not part of their core business and that once it is separated the market will value ROC at a higher P.E. A byproduct of Lithium production is potash which is sold as a fertilizer. In the past, ROC sold potash exclusively in semi-finished form to a Chilean company. ROC made a strategic decision to build their own finishing facility so that it can sell the finished potash product directly to the market, resulting in higher profitability. The contract with the Chilean company was cancelled at the beginning of this year and ROC prepared its infrastructure. More details should come in the next 10q. The company is concentrating on the lithium iron battery market as the main engine of growth in the future, forecasting double digit growth. ROC has built new plants in Brazil, Turkey, Mexico and India, a new state-of-the-art facility for the production of lithium hydroxide in North Carolina was scheduled to start commercial production in June and the world’s largest Surface Treatment facility in Michigan will go online later this year. The hip joint business should continue its growth especially in the light of the recent health concerns about metal-to-metal hip joints. ROC's history of strong earnings, low debt and one of the lowest PEG's in the chemical sector makes it an attractive takeover target. http://beta.fool.com/iumfool/2012/01/28/5-likely-takeover-target-chemicals/1376/ Since going public, ROC has steadily reduced debt thanks to its strong cash flow and last month initiated a handsome dividend of over 3%. From Barron's 6/25/12 Commodities Corner: Lithium Could Power Higher Lithium's future is set to burn brighter. The lightweight metal is used for high-powered batteries that pack enough punch to power an electric car, let alone a cellphone or laptop. As the world goes more mobile, investors should expect powerful demand to push lithium prices higher. "When it comes to battery demand for lithium, we're looking at growth of 20% to 25% a year over the last several years," said Tim Tiberio, a senior analyst with investment bank Miller Tabak. The metal isn't traded on an exchange, so investors should look to buy shares in the four companies that control about 95% of global lithium production. Talison Lithium (ticker: TLH.Canada) and Rockwood Holdings (ROC) vie for the top spot, and are joined by NYSE-listed Sociedad Quimica y Minera de Chile (SQM) and FMC (FMC). Lithium's use in technology has been growing about 20% a year since 2000 and today accounts for 30% of global lithium demand, said Peter Oliver, CEO at Talison Lithium. This is just some of what's going on with ROC. There's some very good presentations on their website's investor section. http://www.rocksp.com/index.htm Numbers: http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=ROC

To: E_K_S who wrote (2082)

7/30/2012 11:00:50 AM

From: Sergio H

Respond to of 4719

Good Morning EKS.

On ROC'S insider selling, those insiders are compensated with a boatload of options:

Name Options Value

Seifi Ghasemi 1,404,958 18,397,800

Robert Zatta 253,952 2,832,888

Thomas Riordan 301,183 3,393,289

On the dividend, it was just initiated:

reuters.com

Overall, I think that the underperformance of this stock is what makes it attractive.

On the underperfomance to its peer group, management feels its share price is held back by one division. There are plans for an IPO or sale of that division.

reuters.com

The low ROA is due to several factors that the co. is addressing that I outlined in my previous post. There's a lot going on with ROC .

Thanks for your vote. I bought ROC this morning for my portfolio.