Aug 2, 2022Liked by IJW

nothing like a new ceo to come in and slash what more experienced predecessors deemed essential !

on a more serious note, the industry dynamics are good, but the specifics require a ceo with a track record in the domain, a history of a successful turnaround, and the right incentives (hunter harrison being the classic example)

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Well he was COO of Sherwin Williams where he helped integrate its recent acquisitions. Quite succesfully it seems.

But if you read transcripts of recent conferences and calls he outlines where the efficiencies will come from. It seems credible that at least $500m-1bn can be squeezed out of it?

$400m from SG&A alone.

And PKG had 18% operating margins LTM, while Smurfit had 12% operating margins vs WRK's 10%.

But even if that $1.5bn is largely a bogus figure, there is still some upside here.

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Aug 3, 2022·edited Aug 3, 2022

whatever he can do is gravy. i dont consider SHW in the same industry as paper/timber/pkg nor was a turnaround situation, so apply a huge haircut to the myth that generic business skills result in a huge success on every cycle of the CEO carousel.

am watching larry culp with curiosity, as he did stay in a closely related industry but never faced a turnaround scenario. the GE breakup will make a final verdict difficult as he stays with the best segment.

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Yeah it is a bit fishy that he is lowballing EBITDA guidance so much while giving this huge $1.5bn figure. Probably why the market is skeptical too.

This is not the most sexy stock, but can do a lot worse than a 16% yield, and unlikely to get nasty surprises here as earnings are rather predictable. If earnings stay about the same and there is not much progress on that $1.5bn figure in the coming 4 quarters I probably sell.

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