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Author: DawdlingRamblr One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120  
Subject: Not quite a spinoff, but... Date: 11/1/2006 10:30 PM
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Any one looked into Owens Corning (OC)? I only bring it up because they just emerged from bankruptcy, and may have the makings of a Joel Greenblatt play (my assumption is that any one on a spinoff board is interested in anything that Greenblatt might recommend). Here's a quick, late night rundown of why I think so -

As near as I can tell, it was (and is) a great company driven into bankruptcy by something that doesn't reflect the quality of their operations, either past and future, i.e. asbestos litigation. From what I gather, the asbestos litigation issue is now solved, the future liabilities are known (aside from some legislation that might lessen the burden), and Owens Corning can now move on.

They appear to have solid products and brand recognition (you gotta love the Pink Panther) and my initial look at their financials looked pretty good.

So far, so what, right? Here's the part that I am hoping turns this into a classic Greenblatt play. As part of the asbestos settlement, Owens Corning issued new stock to many of the bondholders at the time of the bankruptcy, about 25% of the current shares outstanding, if memory serves, and also gave them rights to buy additional shares at $30. The majority of those rights expired unused, signifying (at least to my simple thinking) that the bond holders aren't interested in owning any more of the company (at least not at $30) and hopefully known of it at all. If that's the case, there'll be some indiscriminate stock dumping in the near future. Also, the backers (I forget the exact term) (JPMorgan, etc.) of the rights offering ended up buying a bunch of the stock since the rights expired unused. They probably will be looking to unload as well.

So the question becomes, when to buy? I'm sorry but I don't know yet. My guess is...not yet!

If anybody has time, please run through some valuation. I'll try to give it a go myself, but a) I'm fairly inexperienced so it takes a bit longer and b) I probably won't have much time except for possibly this weekend.

If nothing else, hope somebody finds this blip on the radar useful.

Take care!

Jim
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