Why Rockwood Holdings Inc. Shares Popped

Is this meaningful? Or just another movement?

Jul 15, 2014 at 12:17PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Rockwood Holdings (NYSE:ROC), the world's largest producer of lithium products, surged 10% today after rival Albemarle (NYSE:ALB) agreed to acquire it for $6.2 billion.

So what: The cash-and-stock deal -- $50.65 in cash and 0.4803 of one Albemarle common share -- values Rockwood at $85.53 per share and represents a premium of about 13% to its Monday closing price. Albemarle is making the move to boost its exposure to the fast-growing lithium market but, judging by its own stock's 4% pullback today, Mr. Market isn't too thrilled with the price that management is paying to do it.

Now what: Albemarle expects the deal to be accretive to its adjusted EPS in the second year after it closes and sees about $100 million in annual cost savings by 2016. "The resulting company will have broader customer reach, increased diversity across end markets, technologies and geographies and more consistent and predictable earnings growth," said Luke Kissam, president and CEO of Albemarle. "The strong cash flows generated by these businesses will enable us to reduce leverage rapidly, support our ongoing dividend payments, and continue investing in the businesses to fuel growth and deliver increased value to our shareholders." So while Rockwood's upside is likely limited at this point, Albemarle's newly bolstered growth prospects are certainly worth looking into. 

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A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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