Walter Industries, Inc. (NYSE:WLT)

Ripped off from Bob.

Too many outperforms from too many All-stars.

Nice price to buy in now, should bounce back to 45$ soon...

Latest quarterly results weighing on stock, but still lots of hidden value to be released with full spinoff of MWA. Stock may be discounted by as much as 50% at these prices plus many experts see water as the next energy-type commodity play. Good luck all!

If you subtract the market value of 2 shares of MWA from 1 share of WLT (this will be the approximate amount distributed by the end of the year), this gives you the value of the coal, homebuilding, and "other" segments.

$45.50 - 2($15.50) = $13.50 per stub

Then, subtract off the relatively small value of homebuilding and other segments (about $1.50-$2.00) to get the value of the coal division. $13.50- ($1.50 to $2.00) = $11.50 to $12.00

This price of about $12.00 implies of P/E multiple of around 4 when other coal/nat. gas companies trade at least 8-12x earnings.

Because of the large amount of debt used in the MWA merger (and acquired in it), there will be significant cash outflows going to paying this down. However, the company's generation of Free Cash Flow (Op. Cash Flow - Cap Ex) added to the large amount of cash (about $8.33 per share) should be sufficient to repay much debt early.

Homebuilding is stalled, not paralyzed. Energy and associated transportation is hot. Clean water will become a dominate focus in years to come (think Gates Foundation not Tank Girl).

Own MWA for the water and hopefully WLT will spin off the coal business.

Trading below break up value

Coal, water, homes

Two companies with pretty good propects for the price of one. Typical Bill Mann Hairball that might just work.

Long term deep value play.

Fundamental did not change, but the stock price is getting cheaper and cheaper. What should I do... :)

Get two companies for the price of one

1. Three segment company selling at discount to intrinsic value.
2. Anticipated spin offs in coal and water subsegments may yield greater than expected gain
3. Company paying down debt

Risks:
Highly leveraged company

I look forward to hidden value being unlocked when Meuller is spun off.

Daily stoch cross and may bounce from support levels at $42. Target is $54

Known as a home building business, which is why I beliewve it is undervalued. 75% Owner of Mueller, a company that creates water infrastructure equipment, a sector that will become increasingly more important as drinking water restrictions get tighter and infrastructures get older. Finally, also an energy play with coal mines and natural gas storage.