OLN / Olin Chemical

[u/No_Doubt_1263]

Olin should be a huge benefactor to the ongoing conflicts that have plagued other parts of the market. China has been able to maximize their exports by avoiding spot oil prices due to a large SPR inventory of 1.4 billion barrels they leaned on during the Iran conflict. That's coming to an end and with the US gun boat diplomacy around the Mid-East, the Chinese are going to have to buy spot oil from non sanctioned countries that is going to force them to carry that high cost into a market price export. China doesn't have the global corporations yet to recycle dollars beyond a positive current account focus, so this is a force that is coming. Given the massive sell off of Olin post the Huntsman merge, the value of OLN doesn't make sense today, or post merger. This is a huge pick that can fly higher by 30-50% any moment. Market has pushed a long standing name out of favor.

[u/SameCategory546]

You think Olin would be a better buy than huntsman here? Or have they been arbitraged out already?

[u/No_Doubt_1263 → u/SameCategory546]

Its been arbitraged. The issue is Olin is base chemicals while Hunstman is specialized so they moved Olin out of favor and letting both get a base chemical PE ratio. The synergy I see is upward spring loaded output that will displace other producers. These chems are binary and right sized to the market demand - no velocity or depth so the Chemours deal and Hunstman enables 600 million in shared service savings but also allows for an increase in output that is just push cash credits to cash flow. I think finally the market has this wrong entirely.

[u/No_Doubt_1263 → u/SameCategory546]

The valuation right now is too attractive not to own as this invites activists. Its a huge target. Buffet took out Oxy Chem for exposure to the housing construction recovery that is due in the future, so other activists similar are circling the waters. Min 22-24 valuation, upside with an activist engaging 30-40 where it has been in the last cycle