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Peter Lynch

Kaiser Industries
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1971-1977
Industry: Conglomerate
Category: Deep Value

Context
Kaiser Industries fell from $25 to $13.
On a young analyst Lynch's recommendation, Fidelity bought one of the biggest blocks ever traded on the American Stock Exchange at $13.
The total buy was $65m.
When it fell to $11, Lynch said there was no way it would fall to $10.
The shares fell to $8, Lynch called his mom and said there si no way they drop below $7.50.
The shares dropped to $4 in 1973.

Why the Company is Mispriced
The market doesn't understand the underlying value.

Alternative View
Kaiser Industries held real estate, aluminium, steel, cement, shipbuilding, aggregates, fiberglass, engineering, and broadcast businesses.
The company had very little debt so it can't go bankrupt.
Lynch calculated the liquidation value, and believed it to be $40.

Result
The shares eventually realized $30 in value, but I believe that they were realized through a few spinoffs.
The return on the shares is 130%. Assuming the holding went from 1971 to 1977, the CAGR is about 13%.