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

To: Spekulatius who wrote (61528)	12/8/2018 11:00:37 AM
From: robert b furman	Respond to of 78670

Hi Spek, Appreciate the history - always good to hear an opinion from someone that has lived the stock. Just thinking out loud here, Did I read about them building a plastics plant in the houston ship channel area? Have to continue my DD, but it's on my stocks to watch list. Thanks again. Bob

To: Spekulatius who wrote (61528)	12/9/2018 4:24:37 PM
From: Spekulatius	Respond to of 78670

BASF‘s strategy is to build huge chemical complexes with the idea to use every byproduct for something else. They call these integrated chemical complexes “Verbund”. Their biggest Verbund site is Ludwigshafen/ Germany and then they have clones in Antwerpen (Dutch), I think they have two in the US (Texas), one JV in China and one wholly owned to be build in China. The idea is build in achieving a cost advantage, so they have an integrated refinery, access to easy transportation (Antwerpen, Houston) as well as cheap raw materials (Texas) I have fond memories for BASF. It is the first stock I ever owned and I lived close to Ludwigshafen and have friend who work there (or their parents did). They take good care of their employees and in exchange their employees are fiercely loyal. It’s a no-nonsense company and conservatively managed, no cowboy culture there whatsoever. I took a course in polymer science at the university , which was taught to by a BASF alumni, who headed a larger division within BASF plastics beforehand. The highlight was a 3 day trip to their site where’re they gave us a great look into their operation, with factory tools. I recall a trip to a “pilot site” that was 4 stories high and run by a junior engineer, I was first thinking thsynit was a production facility due to its size, but no this was a just a pilot site to test the process and upon completion, the real facility would be build within that plant. They told us that the idea was to use all the inevitable buyproducts in that plant somewhere else, so it’d doesn’t become a problem waste, but have value. there there are thousands of pipelines in this plant that are used to move product Strom one plan to the other. This sort of grew organically Ludwigshafen, but now they want to duplicate this in other locations. Does this make BASF a good stock to buy? Certainly not. But it is comforting to know how a company works and that they have a strategy that isn’t just made up by a few dozen head honchos. The employees live it and it has been working for a while and probably will work in the futures. there may be other ways to do it, but this is what they do well. BASF is also big in Agriculture products like pesticides and Fungizides etc. They always liked to expand the business, due it the high margins and it fits what they do well. I think they got out of low margins fertilizers. What I like about their strategy is that they build this business opportunistically, unlike Bayer, they buy a business , when it’s available like Bayers AG product lines that they needed to be divested. It’s again and indication of a company that doesn’t like to be flashy, but has a sound strategy. At least I hope...