Author Topic: AA-Alcoa Inc.  (Read 8601 times)

Worlds Within the Margin

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AA-Alcoa Inc.
« on: April 03, 2013, 05:44:21 PM »
Any thoughts about this stock? I couldn't find a thread about here. I think it has pretty good long term prospects (also trades under book currently). Alcoa seems to primarily trade in relation to the economy, China, and aluminum prices. Pretty good management in my opinion as well, trying to stay ruthlessly efficient in a aluminum market fueled by Chinese over production. Though debt may be an issue.  Any ideas?


JayGatsby

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Re: AA-Alcoa Inc.
« Reply #1 on: October 17, 2015, 12:51:48 PM »
Has anyone looked at Alcoa recently? I know there's a lot of interest in aerospace on the boards (RR, etc) which is why I bring it up. They recently announced a split of their metals and value-add business (http://www.wsj.com/articles/alcoa-to-split-into-two-companies-1443437130). I haven't dug in enough yet on the numbers, but the hope would be the sum of the parts is greater than the whole. They've had massive restructuring costs that have been a bit of a black eye for them financially. As far as I can tell they've actually done a massive amount of restructuring (closing / selling facilities, etc). I suspect it is, but wondering if this is worth the  time to dig in further. AA is a pretty big name, so there may be some forced selling once they actually split.

SnarkyPuppy

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Re: AA-Alcoa Inc.
« Reply #2 on: November 13, 2015, 01:51:20 PM »
Baupost (Seth Klarman) just disclosed a new stake in Alcoa as part of the 13F release today

http://www.sec.gov/Archives/edgar/data/1061768/000114036115041178/xslForm13F_X01/form13fInfoTable.xml

arcube

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Re: AA-Alcoa Inc.
« Reply #3 on: November 13, 2015, 02:39:35 PM »
Baupost (Seth Klarman) just disclosed a new stake in Alcoa as part of the 13F release today

http://www.sec.gov/Archives/edgar/data/1061768/000114036115041178/xslForm13F_X01/form13fInfoTable.xml

If I am reading it correctly, that is BG's largest position?

JayGatsby

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Re: AA-Alcoa Inc.
« Reply #4 on: November 13, 2015, 02:45:36 PM »
Interesting. So looks like he owns ~4% of the company? Thought he owned more Micron... guess he scaled back or I was just wrong. Arcube, I think colum 4 is their dollar position. Looks like Cheniere is the bigest, then Viasat, and this is #3 I think?

I fully allocated to it around $9.50. Wish I'd saved some dry powder, but still happy with the price. What's ineresting is most articles on the company act like the value-add segment doesn't even exist. They discuss the challenges in primary aluminum related to China and how that's a death sentence for AA. Even if you assume that side is worthless as an enterprise there's still value in the assets, including a few hydroelectric plants.

There's some good backlog with Ford, Lockheed and others that hasn't hit yet. The technology they have in the F150 has potential to be pretty big, but right now is valued at $0. Actually it's probably valued at a negative amount because they've been spending heavily on R&D.

I'm a little weary of their acquisitions because it looks like they paid full price while AA is currently at a discount. I guess time will tell if they're able to realize the synergies they anticipate. Also they'll probably be impacted by the same slowdown in commercial jets that has hit RR.
« Last Edit: November 13, 2015, 02:47:59 PM by JayGatsby »

arcube

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Re: AA-Alcoa Inc.
« Reply #5 on: November 13, 2015, 02:52:47 PM »
Interesting. So looks like he owns ~4% of the company? Thought he owned more Micron... guess he scaled back or I was just wrong. Arcube, I think colum 4 is their dollar position. Looks like Cheniere is the bigest, then Viasat, and this is #3 I think?

I fully allocated to it around $9.50. Wish I'd saved some dry powder, but still happy with the price. What's ineresting is most articles on the company act like the value-add segment doesn't even exist. They discuss the challenges in primary aluminum related to China and how that's a death sentence for AA. Even if you assume that side is worthless as an enterprise there's still value in the assets, including a few hydroelectric plants.

There's some good backlog with Ford, Lockheed and others that hasn't hit yet. The technology they have in the F150 has potential to be pretty big, but right now is valued at $0. Actually it's probably valued at a negative amount because they've been spending heavily on R&D.

I'm a little weary of their acquisitions because it looks like they paid full price while AA is currently at a discount. I guess time will tell if they're able to realize the synergies they anticipate. Also they'll probably be impacted by the same slowdown in commercial jets that has hit RR.

Thanks for the correction Jay. I was just looking at purchases of Q3. Thanks.
Wasn't there a plan that AA will spin-off a part of the company that is not highly exposed to the commodity cycle? more value add?

JayGatsby

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Re: AA-Alcoa Inc.
« Reply #6 on: November 13, 2015, 03:02:46 PM »
Yes, mid-2016 or so it will go effective I think. They're splitting the business into the commodity side (alumina mining, smelting, etc) and the value-add side (rolled al, aerospace/auto/packaging, etc).
« Last Edit: November 13, 2015, 03:07:48 PM by JayGatsby »

Own The Rails

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Re: AA-Alcoa Inc.
« Reply #7 on: November 13, 2015, 03:17:14 PM »
Steven Romick of the FPA Crescent Fund (portfolio http://www.dataroma.com/m/holdings.php?m=FPACX via Dataroma) talks about his AA investment at around 8:50: https://www.youtube.com/watch?v=lOFt2sWHas8

Own The Rails

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Re: AA-Alcoa Inc.
« Reply #8 on: November 13, 2015, 03:19:35 PM »
Also, here's Baupost's latest 13-F: http://www.dataroma.com/m/holdings.php?m=BAUPOST

AA now his third largest position, and it looks like he was basically done cashing out on MU as of Sept. 30th. Probably entirely out by now.

arcube

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Re: AA-Alcoa Inc.
« Reply #9 on: November 25, 2015, 11:28:01 AM »
Just wondering why this thread is not getting any love from the board or specifically ex-PCP owners.

Also wondering what a bear case on this one looks like. Any comments to that would be deeply appreciated.