Daily Journal AGM 20170215 stream by CNBC.com

[Mephistopheles]

Tenneco close to Munger's purchase price. Anyone looking at it?

 

Interesting idea. I just pulled up the long term stock chart on Tenneco and over the decades it probably traded at an average of $30 per share, give or take. However in 2001 it dropped to $1, and then rose back up to $30, then in 2009 it fell to $1 again, before rising to $60 at points, then over the last two or three years it has fallen to around $2 again.

 

Have you looked at the valuation or fundamentals yet? I haven't had time to dig into it. Are the reasons that it's cheap this time different from the past couple of drops?

 

The big difference is a massive increase in debt load due to the Federal Mogul acquisition in Oct 2018. $1.1 billion of obligations expected this year. They have $700 million of cash on hand and another $800 million remaining on the revolver. This should help weather the storm for the next year. But the stock is trading like an option. The unsecured debt is trading for 50% of par. May be a good bet and buy some of the equity on top , that's what Munger did.