# Norbord Inc (NBD.TO)



## doctrine (Sep 30, 2011)

Any holders of Norbord Inc (NBD.TO)? I have a fairly substantial position. It's had quite a move today when another company in the space got taken out by an American company.

http://www.bloomberg.com/news/2013-...nsworth-agrees-to-takeover-toronto-mover.html

I bought at $30.85 in July and watched it increase to nearly $33.50 then drop 20% to nearly $25. I couldn't quite figure out why, and I don't think there was any real reason, so I topped up at $25.53 last week. 

Ainsworth was purchased at 5.7 times EBITDA; a similar value on Norbord would put it at $2.5 billion; it currently has a market cap of $1.58 billion. Even though it's up ~10% today, it's still 22% below its 52 week high. While the yield is high at 8%, the trailing 12 month P/E is 7.5 giving them a payout of 60%. 

Just wondering if anyone else was an owner. They were added to the TSX Composite in June so of course anyone with XIC or ZCN is also an owner.


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## HaroldCrump (Jun 10, 2009)

The most vocal owner of Norbord on this forum is hboy43.
He has held this since before 2008.
Unfortunately he hasn't been here in a while (ever since he bought a boat).


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## daddybigbucks (Jan 30, 2011)

doctrine said:


> I bought at $30.85 in July and watched it increase to nearly $33.50 then drop 20% to nearly $25. I couldn't quite figure out why, and I don't think there was any real reason, so I topped up at $25.53 last week.
> .


OSB prices have tanked in the last 2 months.
alot of people thought it was a blip but prices are staying down and alot of idled mills are coming on line.

http://www.randomlengths.com/UserFiles/Pages/5fbd0a6d-8940-4350-99d7-b8fe6d400220/4af0f8ae-5885-4b7e-b744-48625018e0b7/Panel_Composite.gif


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## doctrine (Sep 30, 2011)

OSB prices for Norbord averaged $347 in the last quarter which I believe means that current earnings are reasonable ($1/share/quarter as opposed to $1.5 they had in Q1). With rapidly declining debt, my bet is that there will be additional owner-friendly measures in the next 12 months (perhaps back to special dividends); provided, of course, there isn't a massive US real estate or economic collapse, which I think is unlikely now.


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## daddybigbucks (Jan 30, 2011)

doctrine said:


> OSB prices for Norbord averaged $347 in the last quarter which I believe means that current earnings are reasonable ($1/share/quarter as opposed to $1.5 they had in Q1). With rapidly declining debt, my bet is that there will be additional owner-friendly measures in the next 12 months (perhaps back to special dividends); provided, of course, there isn't a massive US real estate or economic collapse, which I think is unlikely now.


if osb prices stay around the same mark as today, then they will average $264/mbf.
I dont know about NBD but $220/mbf was ANS break-even point!

I have been following ANS for the last 2 years and it follows the osb price to a tee.
NBD i felt rose to the top on the 7 year osb highs and then stayed at the top by the speculation that the US housing boom was going to start. 

I was about to sell most of my ANS shares before the next quarterlies, so the buyout worked perfectly for me.


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## liquidfinance (Jan 28, 2011)

I've only had a quick look on Google Finance but did they cut the payout from 2009 through to May this year?


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## doctrine (Sep 30, 2011)

Yes, no dividend from 2009 to 2012. There was a share recapitalization too, so you'd likely be down by 60-70%, but if you participated (everyone could), you'd be ahead because the price was so low.

Thanks for your comments daddybigbucks. I think I'll stay in Norbord at least until the US housing market rebounds fully. I see it sort of like the auto market.. it's now rebounded to pre-recession lows and I've gotten lots of great gains. If US housing rebounds from 800k to 1.6-1.7M units a year, then I think this is a good way to take advantage; most of the other industries have already risen up. Housing is just so cheap, and incomes and employment good/rising, that I really think it's inevitable. They have European operations (about 2*%) and their economy is also picking up.


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## Canadian (Sep 19, 2013)

This has come across my radar recently. OSB prices have rebounded since September and demand is increasing in the US, UK, and Germany. I see the company as very undervalued and the 8% drop over the past few days is making me watch closer. I'm thinking of pulling the trigger if it falls below ~$31-$30ish. Anybody else watch/hold/have thoughts on this company?


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## daddybigbucks (Jan 30, 2011)

Canadian said:


> This has come across my radar recently. OSB prices have rebounded since September and demand is increasing in the US, UK, and Germany. I see the company as very undervalued and the 8% drop over the past few days is making me watch closer. I'm thinking of pulling the trigger if it falls below ~$31-$30ish. Anybody else watch/hold/have thoughts on this company?


where have you got OSB prices have rebounded? because NBD has risen?

OSB are still down low
http://www.randomlengths.com/UserFiles/Pages/5fbd0a6d-8940-4350-99d7-b8fe6d400220/c99c99bb-37bf-4648-a851-38ec9455dcaa/Panel_Composite.gif

NBD is a very well run company, i just think it is fully valued right now.


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## Canadian (Sep 19, 2013)

My apologies. After reading that I see I didn't write it so well. I meant to say that it looks like OSB prices have found a support price and _should_ rebound. The company managed Q3 EPS of $0.51 despite North Central OSB prices averaging $252 per Msf and South East OSB prices as low as $207 per Msf. I would be shocked if the company's Q4 prices per Msf remained so low. At almost any price above the two previously mentioned will allow the company to fully cover the $0.60 dividend and more. I see the reopening of its Jefferson mill and plans to reopen its Huguley mill as signs of improved demand and good things to come.


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## gardner (Feb 13, 2014)

Norbord has paid dividends for a year now, and they're buying back shares. They seem to think they have money.

Any opinions whether they are likely to sustain their dividend? At 0.50/qtr they would yield over 6.8%. Would they be a reasonable buy for a dividend investor?


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## hboy43 (May 10, 2009)

gardner said:


> Norbord has paid dividends for a year now, and they're buying back shares. They seem to think they have money.
> 
> Any opinions whether they are likely to sustain their dividend? At 0.50/qtr they would yield over 6.8%. Would they be a reasonable buy for a dividend investor?


Sustain dividend, no idea. 

Probably not an investment suitable for divvy investor. They quite clearly stated that they intend to float the dividend with earnings/business cycle. So if you don't mind a ~5 year dividend interruption like last time, have at em. 

hboy43


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## doctrine (Sep 30, 2011)

I am out of Norbord at $24.65 last week, selling my 550 shares. Took a small loss, but not too bad after dividends (perhaps 7-8%). The US new housing market is just in the dumps. I'd rather get back in perhaps after a dividend cut - the company itself is in good financial shape, but they can't afford the dividend until the US market recovers, and I think the stock price is reflecting it.

US new home sales are now at a 400k annualized pace - this is just crazy low compared to pre-recession levels of 1.5 - 2 million. Perhaps I can find a better name with a lower dividend to play it.


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## londoncalling (Sep 17, 2011)

Should have waited a week. Longer term may not make a difference. I had a lowball bid in place to average down. Missed it. Time to look elsewhere. Hoping to pick up some Telus but we will see what happens. Cheers


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## daddybigbucks (Jan 30, 2011)

Doctrine, any opinion on the merger with ANS?
NBD is a well run company and ANS has a lot of long term contracts as well as a lot of Japanese clients.

I sold 1/3 of my shares last week during the unfounded rise but now we all see the reason.
Think I might sell the other third for cash and hold out the rest for the new company.


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## doctrine (Sep 30, 2011)

I sold my NBD shares a few months ago at current price levels. NBD did fall 20% after but it's since recovered. They're still not making enough money to pay the dividend, so may as well sell and wait to see what the dividend policy is next year. It's advertised as variable, but you know how markets react to any cuts. I have heard on the margins that supply of OSB is very plentiful, so I'm not so sure it is a great long term investment. If you believe in a US housing recovery, you're probably better off in something like Tricon Capital (TCN) for more direct exposure.


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## hboy43 (May 10, 2009)

daddybigbucks said:


> Doctrine, any opinion on the merger with ANS?


"The two companies said they expect cost savings of about $45-million per year, achievable over an 18-to-24-month period." From the Globe and Mail today.

I go back something like 8 years with Norbord through the bad and finally the good. It is my impression that the controlling shareholders (Brookfield) are honest straight shooting people. Unlike say Nova Chemicals back in 08/09, when NBD got into trouble, they didn't sell (or buy) the company for a pittance, but instead came up with a rights offering allowing shareholders to continue or fold. Many (Most?) folded and left a good pile of money on the table, but that was their free choice. 

So that would be enough for me to believe the above statement, but when you combine that with the fact that BAM are on both sides of this equation, thus quite familiar with all operations, that savings is just a whole lot more likely to turn out to be true. Plus the US housing recovery is not really there yet, though I suspect if oil stays down, housing will get a boost.

I bought another 1000 at 21.71 a few months back to hold 7400. I am sticking around. 

hboy43


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## londoncalling (Sep 17, 2011)

still holding as well I think long term a good holding. Cyclicals can be a good play if done right. I initiated my position at a price slightly higher than today but I feel that the housing recovery isn't quite there yet. At some point it will.


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## gardner (Feb 13, 2014)

Norbord is on fire the last week. I see that the analysts have upped their target, but I see no actual reason why this is so. I've been looking for an opportunity to dump it since they scaled back their dividend. I think this week may be it. Anyone have any insight into what the analysts are seeing that I am not?


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## londoncalling (Sep 17, 2011)

I have zero insight into what the analysts are thinking. But I took the opportunity today to exit the position @ 31.85. It may see more upside but I have looked at my IPS and it does not match. I already have exposure to materials through Western forest Products ( I know the companies vary quite a bit small cap vs large cap, OSB vs specialty hardwoods, one primarily based in NA the others market primarily in Asia). All of these differences were the reason I held both for the past few years. In an effort to decrease my positions and to only hold dividend growers I have exited. After holding for 2 years I have seen a 23% return including Dividends. The hard decision now comes as to where to reallocate these profits.


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## gardner (Feb 13, 2014)

After exiting Norbord a couple of years ago, I've been watching it and thinking of getting back in. They've been paying dividends again in the past year and the price is attractive today at ~$37.

Any idea what caused the 5% drop from friday? I don't see any news or events since Jan 4 earnings call.


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## GalacticPineapple (Feb 28, 2013)

All softwood lumber companies are down.


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