LNXSF - Lanxess: Deep Value Play For The Long Term Investor

2024-03-22 10:37:40 ET

Summary

• Lanxess aims to improve its balance sheet and does so in part by reducing the dividend.
• Lanxess' profits have been volatile in recent years, which is not favorable because of its high debt load.
• Investors seem too pessimistic about the company and hardly give any value to Lanxess' plants.

Introduction

I remember when Berkshire Hathaway (BRK.A) (BRK.B) took a large stake of more than 3% in Lanxess ( LNXSF ) in 2017. This was a strong vote of confidence. And this sparked investor interest in taking a closer look at the company. Berkshire unit General Re bought the shares. At that time, the size of the GeRe portfolio was $22 billion, so their Lanxess allocation was still small at just 0.9%. Regardless, the strategic move to invest in a European stock left many investors wonder....

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