Stockchase Opinions

Malvin Spooner AbitibiBowater Inc. ABH-T BUY Jan 31, 2002

The acquisition of Donohue was a good move. Cheap.
$12.720

Stock price when the opinion was issued

east coast forestry
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DON'T BUY
Looking for the continued merger with Bowater (BOW-N). Stock has been hit hard lately. There will be synergies of about $250 million, but he doesn't like the outlook for the commodities. Not a fan of the sector.
HOLD
Owns and has "got our brains blown out" Just moved it from a buy to a hold.
SELL
All the newspaper companies are hitting 52-week lows and are getting killed by Google. Amalgamation of Abitibi and Bowater were 2 very weak businesses. His model price is $4.31US. Looks like they might lose a mean estimate of $5 for 07 and another $5 for Dec 08..
COMMENT
Trying to turn a corner. Recently announced some closings and cost cutting. The synergies on the merger are starting to build up. Hard to say if it is time to buy the stock yet because the environment is so bad.
COMMENT
All newsprint players have been decimated, specifically those in Canada whose costs are in Cdn$’s. Has BV of about $25 with a terrible balance sheet. If a company can pay its banks when the commodities are low they have massive leverage when commodities improve. Newsprint inventory is down 25%, largest decline in 30 years. It could earn $8 a share and at $17, in 4 years you could be paying 2X earnings. Needs to do more work, but it fascinates him.
DON'T BUY
Now closing Canadian plants because of high costs and keeping US plants. Forest products industry has been much more disciplined about bringing on new capacity and closing low capacity. Stock price has been abysmal and some smart investors have been buying lots. If you believe that every commodity will have its day in the sun, wait for it to start moving.
DON'T BUY
He has been short this stock on and off since he started his fund. Although he is not short at this moment, it is still in the short camp. Earnings continue to go down because newsprint demand is going down. The slowing economy further accelerates its decline. Strong Cdn$ increases their cost structure.
HOLD
Had averaged down on this one and he was wrong. Would not Buy, as their loss is just too big. He has it as a Hold. Losing $250 million a quarter.
DON'T BUY
Huge debt. A lottery ticket. Not for the faint of heart.
DON'T BUY
He owns but thinks he may have made a huge error in holding it. Highly speculative. Huge debt load. Have some debt they have to deal with by the end of this month.