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John Griffin More than Doubles His Stake in Owens Corning

October 24, 2012 | About:
John Griffin, president of hedge fund Blue Ridge Capital, has added more than 4.1 million shares to his holding of residential and commercial building material producer Owens Corning (OC), reported on Oct. 9 on GuruFocus Real Time Picks.

Headquartered in Toledo, Ohio, Owens Corning operates facilities in more than 28 countries, producing such materials as fiberglass reinforcements, insulation, roofing and asphalt; the company made $5.3 billion in sales last year, according to its website.

On Oct. 17, Owens Corning announced an underwritten public offering of the company’s senior notes, intending to use the acquired net proceeds for purchasing $250 million aggregate principal amount of 6.5 percent of its senior notes due 2016, and up to $100 million aggregate principal amount of 9 percent of its senior notes due 2019. The company also intends to use its proceeds from the offering to repay outstanding debt as well as for general corporate purposes, looking to induce a debt extinguishment of about $75 million for this year’s fourth quarter.

The tender offer is scheduled to expire Nov. 14 at 5 p.m. EST.

Owens Corning has reported weakened demands in the U.S. roofing and fiberglass markets in this year’s second quarter, whereas insulation production is set to anticipate higher volumes due to an improving housing market for the rest of 2012, according to an Owens Corning press release.

Griffin’s latest transaction with Owens Corning places his ownership at 5.63 percent.

Starting off with a little over 2.5 million shares, Griffin first purchased Owens Corning in the second quarter. Now, Griffin’s shares total to 6,670,000.

Out of his 41 stocks, industrials make up about 13.7 percent of Griffin’s portfolio, in third place after consumer services and technology.

Other than Owens Corning, Griffin is also shareholder of fluid handling product-supplier Colfax Corp. (CFX) where he is 5.73 percent owner, insurance and financial services provider American International Group Inc. (AIG) where he is 5.1 percent owner and website security solutions provider VeriSign Inc. (VRSN) where he is 4.1 percent owner.

Besides Griffin, the following fellow Gurus also hold stakes of Owens Corning: David Tepper of Appaloosa Management LP, Lee Ainslie of Maverick Capital, Richard Pzena of Pzena Investment Management LLC and Steve Mandel of Lone Pine Capital.

Trading at $31.75 per share, Owens Corning has a market cap of $3.82 billion; it has a P/E (ttm) ratio of 23.6, a P/B ratio of 1.1 and a P/S ratio of 0.7.

The company also has a Financial Strength rank of 5 out of 10, a Profitability and Growth rank of 7 out of 10 and three Severe Warning signs that denote a bankruptcy possibility in the next two years, declining revenue in the last five years and severely divergent cash flow reported from its net income.

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About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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