# Norbord RE- US housing uptick



## LOST (Aug 30, 2010)

I just purchased some norbord recently and was wondering if anybody else is thinking that the US housing market is just starting to take off and is a good entry point. Stock has doubled recently but may be good for long term hold.


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## ddkay (Nov 20, 2010)

I bought in at $17 after reading some of hboy43 posts about it. Sold all Friday. Look at US housing stats from earlier this week.. prices are up but starts are down 3% in November. And the fiscal cliff could really throw this off the rails. I may re-enter sometime in January.


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## daddybigbucks (Jan 30, 2011)

Lumber was my commodity pic for 2012 and it has done very well.
Some analysts are saying the 5 year supercycle is starting now in lumber and wood products. I tend to agree but I may be a bit biased.

I parked most my money in ANS, an OSB panel provider.
I bought a lot of shares under a dollar and have been selling on the way up.
I had about half my shares left and they just announced a Rights offering for $1.25 for 1 and a half shares so I got to load up again.

ANS isn't the best run management wise but they making money hand over fist when OSB prices are as high as they are now (ie $358perMbf)
A lot of mills have shut down permanently because of the depressed price of lumber last couple years. Classic supply and demand.
I would watch your commodity on RandomShorts, and hold till you see weakness in the market.
good luck


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## LOST (Aug 30, 2010)

*Re- Randomshorts*



daddybigbucks said:


> Lumber was my commodity pic for 2012 and it has done very well.
> Some analysts are saying the 5 year supercycle is starting now in lumber and wood products. I tend to agree but I may be a bit biased.
> 
> I parked most my money in ANS, an OSB panel provider.
> ...


 Daddybigbucks: Can't find website for randomshorts. Do you have the URL? Thanks


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## daddybigbucks (Jan 30, 2011)

LOST said:


> Daddybigbucks: Can't find website for randomshorts. Do you have the URL? Thanks


OOPPSS

its random lengths... dumb name

http://www.randomlengths.com/Woodwire/RL-Lbr-Pnl/


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## hboy43 (May 10, 2009)

LOST said:


> I just purchased some norbord recently and was wondering if anybody else is thinking that the US housing market is just starting to take off and is a good entry point. Stock has doubled recently but may be good for long term hold.


I'd be more inclined to say it has quadrupled recently, it closed 2011 at $8.10 IIRC. I don't think I'd want to make a habit of buying stocks on a regular basis after run ups like this, I think one's chances of "buy low sell high" might be impaired.

It is unclear to me when this stock could have been had at under $12 for most of the previous 4 years, how one could feel really good at getting in at $30 now. I agree that chances are reasonable for it to double again over 5 years, but the easy money has been made. I wouldn't be the least bit suprised to see under $20 again, such is the nature of the fickle investing public. Will you still consider it "good for a long term hold" then? 

Frankly the case for Norbord in years past was to me so simple, obvious and compelling, yet any time I discussed it, if I got any comment at all, it was of the nature "wouldn't touch with a 10 foot pole" or "dog". Up until a few months ago, I was the lonely voice in the woods. Now analysts are tripping over themselves with recommendations and someone other than me has raised the topic here. Probably closer to "the beginning of the end" rather than the "end of the beginning".

Still, this is now officially my play money. Way over weight, but I think chances are still good for more $$$ coming my way on this one. I however reserve the right to sell it down a bit and owe nobody any apologies if I do.

Cheers,

hboy43


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## daddybigbucks (Jan 30, 2011)

Norbord and Ainsworth OSB article

http://http://www.bloomberg.com/news/2012-12-27/wood-panel-rally-seen-fizzling-amid-increasing-supply.html?cmpid=yhoo


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## hboy43 (May 10, 2009)

daddybigbucks said:


> Norbord and Ainsworth OSB article
> 
> http://http://www.bloomberg.com/news/2012-12-27/wood-panel-rally-seen-fizzling-amid-increasing-supply.html?cmpid=yhoo


Years ago my wife would marvel at how her credit limit was always raised (without her asking) as if the card company was saying "Bet you can't spend this much".

Re Norbord: Analyst 1, "Bet you can't get to $20". Analyst 2 a few days later, "Oh, yeah, bet you can't get to $26". And finally an analyst in the above quoted article, "bet you can't get to $36".

While I think Norbord is a very well run company with excellent and honourable controlling shareholders in BAM, the truth I think is that a year ago I was running with investors during the dog days of under $10 share price and no analyst attention, but now I am running with speculators in the new sudden $30 era. Running with speculators is like running with bulls (Spanish bulls), sometimes the runners get gored. Might be time to get my flank off the street and up over the barrier.

hboy43


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## daddybigbucks (Jan 30, 2011)

True, i pays to know when stocks are following a Pied Piper or something more substantial.
Thats why i don't watch the housing starts or analysts. I watch the commodity price. 

I think OSB price has to hit about $200 for ANS to lose money so lots of cushion right now until then. 
Owning ANS in 2003-6, showed me alot about the supercycle and it pays to own lumber companies during those times.

I'm fully invested right now in ANS with OSB, but will hold until the OSB market hits 3 drops in 3 weeks then the stop losses will go up. I may lose 25% but the upside is very appealing.
goodluck

I did just take a quick look at NBD vs ANS and the difference is quite striking. In particular:
NBD p/e= 56.1x 
ANS p/e= 11.7x


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## Toronto.gal (Jan 8, 2010)

daddybigbucks said:


> 1. Lumber was my *commodity pic for 2012* and it has done very well.
> 2. I parked *most my money in ANS*, an OSB panel provider.
> 3. I *bought a lot of shares under a dollar* and have been selling on the way up.
> 4. I had about half my shares left and they just announced a Rights offering for $1.25 for 1 and a half shares so I got to load up again.


1. Congrats; fantastic pick *daddybigbucks!* The stock did better than 'very well'. You deserve a prize for such smarts! :encouragement:

2. Wow, good going! I wish I had parked *'most'* of my money in 2012 in ANS as well. You deserve another prize for having had gigantic cojones to have done this! :chuncky:

3. Same here, and now, most of the shares I hold, have been financed with trading profits! In 2012, little American & Canadian beaten-up stocks had been no-brainers rather than falling knives, and ANS was no exception. 

4. I also exercised every single right given; 1.388422 per owned shares to be exact at $1.25!

I read the Bloomberg article this a.m. as well. 

Congrats again on your fantastic 2012!


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## daddybigbucks (Jan 30, 2011)

Welllll, the whole story isn't so rosy t.gal.
I did make alot with ans during the housing boom in 2005.
Ans tanked soon afterwards and consolidated.
after the japan tsunami, i put alot into ans at hugh $3.50+ price tag.
Osb price dropped and i had lost half by the time i sold by stoplosses.
It dropped to $0.7 (or so)briefly and although osb market was ugly, i check the balance sheet and felt they were way undervalued.
so that is when i bought back. And i have been selling on the way up just because it has been so stellar rise. But its all free shares now so i can let it roll.
_Alot of money_ is relative but close to 90% of my tsfa is ans but hold less than 3% in my main rrsp.
Sorry for the winded post but it didnt feel right to take alot of credit as i have stumbled along the way.

But i am amazed you own ANS, your in everything it seems.
When did you buy in?


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## Toronto.gal (Jan 8, 2010)

daddybigbucks said:


> 1. the whole *story isn't so rosy* t.gal...I did make alot with ans during the housing boom in 2005.
> 2. after the japan tsunami, i put alot into ans at hugh *$3.50+* price tag.
> 3. *It dropped to $0.7 *(or so)briefly and although osb market was ugly, i that is when i bought back...its all free shares now so i can let it roll.
> 4. close to 90% of my tsfa is ans but hold less than 3% in my main rrsp.
> 5. But i am amazed you own ANS, your in everything it seems.


*1.* I know it has not been all rosy, after all, it was a beaten-down stock like I said, hence the reason why you deserve a prize for your analyses & courage, because you bought at a difficult time when most people would have avoided such a stock! I only entered the stock market [in general] in 2009, so I only know the stock's previous history from reading, but not through 1st hand experience.
*
2.* Yes, I know, as I traded this stock back in 2011 as well & before its nauseating collapse [always keeping a % of shares], so I'm very familiar with its steady decline, from $3.30+ at the start of 2011, to $.68 by mid December of same year. However, if you know me, then you know that I can't resist good bargains! :hopelessness:

*3.* I added as well [more so in 2012 when stock started to recover] & managed to average down my long-term free shares also, hence I had a decent number of Rights to purchase at $1.25 earlier this month. 

*4.* In fact, I have doubled my TFSA with this stock [and other CDN jrs.], and even shared this with the forum a few months ago in a discussion about using TFSA accounts more as trading vehicles [especially for those with long-term horizon], to make the funds grow faster [as opposed to relying on growth by merely holding less volatile stocks, whether dividend paying or not]. I also hold some in my RRSP account. Great minds think alike [except about ECA, remember?]. :biggrin:

*5.* You obviously had not read my previous post about this stock, and hmmm, too bad as you might have encouraged me to 'park most of my money' in this stock in 2012 [and in late 2011]. 

And yes, you're right, I'm in anything that is a good cheap stock! :encouragement:


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## Sherlock (Apr 18, 2010)

Toronto.gal said:


> *4.* In fact, I have doubled my TFSA with this stock [and other CDN jrs.], and even shared this with the forum a few months ago in a discussion about using TFSA accounts more as trading vehicles [especially for those with long-term horizon], to make the funds grow faster [as opposed to relying on growth by merely holding less volatile stocks, whether dividend paying or not].


That's exactly what I've been trying to do, but after trading over the past 2 years I've roughly broken even. I would have done better if I just bought one blue-chipper like Bell or RBC and sat on it. What am I doing wrong?


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## Toronto.gal (Jan 8, 2010)

Sherlock said:


> after trading over the past 2 years I've roughly broken even....*What am I doing wrong?*


How would I know without details of your trades? 

You said you were trading, but perhaps not often enough, ie: got too greedy/selected wrong or pricey stocks/held for too long and then the market severely reversed? 

For the most part, I traded undervalued/volatile small & mid- caps; few large ones once my account grew enough to afford volume, and the odd stock under $1. I also got lucky with a couple of takeovers in 2011 and 2012, which helped my balance for sure.

Better luck in 2013!


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## daddybigbucks (Jan 30, 2011)

Today:
Norbord down 6.12%
Ainsworth down 7.47%

Is the dream over?

I can't see it because OSB prices are higher this week than they were last week. I think its the momentum investors getting out, and being replaced with value investors.


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## londoncalling (Sep 17, 2011)

Thought I would give this thread a bump. I hold a small position in NBD and am considering selling it for a slight profit (about 10% counting dividends). I originally bought NBD as a long term play on the US housing market. Reasons for selling:

1. It cut its dividend from 60 cents to 25 cents and then again to 10 cents since I purchased in 2014
2. I am wanting to reduce the number of positions I hold. (currently 31)
3. It looks like interest rates are finally beginning to creep up in the US. This may affect housing starts
4. Want to raise capital for other acquisitions

The company does most of its business in the US and Europe. Seasonally speaking OSB has its period of strength from Oct to Apr. 
Anybody still holding or following this stock? Any reasons to hold?

Cheers


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## hboy43 (May 10, 2009)

Hi:

1. The management was quite clear about scaling the dividend with profits. If you bought in 2014, you missed most of the $2.40 dividend days and perhaps their clear statement on this matter.

2. Seems arbitrary.

3. I last read 1.2M forecast for next year. Even this number is well under long term number which I think is around 1.5M.

4. Nothing here.

I think your original thesis of waiting on a housing recovery is sound. The problem is, we have no way of knowing when it is going to happen. I know I can wait, but most investors (using the term loosely) don't see any further ahead than the next quarter.

The way I see it is that NBD is now in a position where all the oil companies are struggling to get to: The business currently has weak pricing, best get all the fat trimmed and survive for now. NBD has spent the last 5, 7 years improving their infrastructure and consolidating, relentlessly driving costs out, just waiting for some decent pricing. We has a small wiff of what is possible a few years back, but it didn't hold.

Your story looks to a cynic like myself of someone who bought a year ago thinking he was going to do well quickly, immediately spent most of the intervening months under water, and now with a brief transient uptick, is looking for a reason to get out to psychologically reverse a "mistake". 

Personally, I last added 1000 in the $22 range I think it was 2 troughs back, maybe 2 years ago. It has since revisited that number and gone a bit under IIRC. I really could not add more for diversification reasons, it is already my largest holding.

I have been with NBD about a decade after my initial buy in the $100 range (adjusted for 10:1 consolidation) I have not actually made that much money, currently show +42% on ACB, plus dividends of course. So long term, I am probably sitting around 8% PA and have not even seen any REALLY good times yet. I think I have done the buy low(ish) part. Waiting on the sell high(ish).

I also really like and respect the majority owners. Instead of taking us out and fleecing us back in the day, they backstopped the rights offering. The people who wanted to get fleeced abandoned their rights to the majority owners, and the rest of us stuck around to wait better days. They sold down their additional shares around $33 (after buying at what $5, $6 range to maintain just over majority interest. They made about half as much money they would have made if they had taken NBD private.

NBD does not work for most as it does not provide a nice constant 8% PA return. I think in the long term it will best this on average, but it has been and likely will be an ugly path that most cannot abide. I can wait it out. Can you?


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## londoncalling (Sep 17, 2011)

Thanks for your informative commentary and analysis.

1. I was aware the dividend was tied to profits. Ultimately all companies dividends are scaled to profits. I guess I was expecting profits to be a little better. I even expected the probability of a cut just not two cuts and not that deep. I was able to get two payments during the $2.40 days.

2. It is quite arbitrary. Just looking to scale back on the number of positions I hold as I don't have as much time to monitor these positions as I once had.

3. Thanks for the numbers on the housing starts. I don't feel a slow gradual raise, which is what I am expecting. Possibly a moot point in the big scheme of things.

I agree with your statement regarding "investor" short term thinking. I tend to do major evaluation of my holdings in late December. I have only sold one position after holding for less than 2 years. In the case of that one It was a poor decision to originally buy(the entire thing was a gamble) was not well thought out with little research prior to buying. I ended up averaging down a few times on turn a profit. I would call this more luck than anything. My other sales, both good and bad have been after holding for a period of 2 years or more.

I wasn't expecting a quick capital gain and was more inclined to believe the wiff would take hold and the stock would stay flat or slowly rise. I would be content to wait and hold if I was being paid to do so. With The current yield, IMO, is not enough for my dollars. I can get the same yield from a GIC without any of the risk. It may have been a good management decision to cut the yield but I find the effect of doing so tends to affect performance in the years following. I may have come a little late to the initial party but I do agree that long term this one will do well. If I do sell, it will stay on my watch list. Selling now may also mean I am leaving before the party really gets good. However, I would rather own this when it can safely deliver a 3-5% yield. 

Your last statement regarding being able to wait it out is my current dilemma.

As always thanks again for your response it was an excellent reminder of some of my reasons for initially starting a position. 

Cheers


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