OTCPK:PILBF - Post by User
Post by
aggmanon Feb 12, 2015 9:00pm
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Post# 23424860
Juniors versus Seniors / Management / Value / suitors / AE
Juniors versus Seniors / Management / Value / suitors / AESeattle,
I will wear my one golden star with pride.
It is interesting - I kick myself for not owning enough of the $9BN Mcap names like MLM - because what matters in investing is the long term and good management. Ward Nye is that man (Jim Cramer had him on for 4 minutes tonight). You buy MLM for $90 - and she gives you 50% (at some point) - yes the market is back and this sector is being rewarded.
Gee I have the scars from chasing juniors across Canadian patches - 30 years of scars - I think its better now - to put my buttons on big.
And - Polaris is no junior, no minow in my eyes, now - they have endured and their position is strong, their material is the best, and here comes the market - back even stronger - these here now are the reaping years. We are going to see compounding of 3-4 factors:
- volume up YoY in SF-San Jose strip (alone)
- Price up YoY (and maybe 2 prices increases per year)
- a weighting to gravels (higher ASPs)
- a weighting to hard-rock (be it Eagle Rock or neighboring third party source)
- the opening of new outlets
- Scarcity, scarcity, scarcity in CA - scarcity will really BITE
In 2007, when VMC acquired FRK - there were some property and quarry swaps that occurred in GA and FL between VMC and MLM (it was DOJ-driven) as part of that arrangement - MLM swapped their remaining NoCal reserves/properties to VMC and effectively exited California (only to re-entry with TXI's SoCal cemt plant last year).
PLS will not get taken out by MLM.
MLM have to solve their untied cement plant in SoCal - and my guess is - they will ride the SoCal recovery for 3 years and then sell it for a full valuation (a good trade). That only changes if they go on the offensive and buy some RMX and aggregate assets around that cement plant - possibly, but low probability.
Only if MLM doubled down on SoCal would they become a suitor to PLS - but that's an outside chance.
Who would logically buy Polaris:
- CEMEX
- Vulcan
- Heidleberg
- US Concrete
- Granite Construction (slight)
The top four of these get a lot of value from the PLS position. It's good to know there are at least four very well qualified, well-capitalized (Cemex discounted for a few years) majors whom would fight to own PLS's resource and market position.
Parting thought: investing for the long term - its compounding that makes you look good over time. Albert Einstein said that the most powerful force in the world is compound interest. So what would Albert make of compounding in aggregate?