A new chairman was ushered in at BHP Billiton in early September. Under this leadership, BHP (NYSE:BHP) planned to divest its onshore shale business and sought a buyer for its Australian nickel business. Investors expects BHP will realize healthy valuations for these assets, as prices of nickel and oil are up 16% and 9% respectively since early 2017. Solvay was the only detractor of note in the materials sector, as the company missed earnings due to below-forecast core profits. The company was burdened by higher energy costs and foreign exchange conversion; yet management reaffirmed its optimistic outlook for 2018. Solvay management expects that the company’s divestment strategy, selling polyamide, cellulose and other non-core businesses in favor of key chemical segments, will reap rewards in the coming year.
From the Polaris Global Value Fund fourth quarter 2017 shareholder letter.
