Starlito (left) and Don Trip, whose mixtape Step Brothers 2 comes out Oct. 15.
Courtesy of the artist
Starlito (left) and Don Trip, whose mixtape Step Brothers 2 comes out Oct. 15.
Courtesy of the artist
Starlito and Don Trip hail from Tennessee, the former from Nashville and the latter from Memphis. Two years ago, they teamed up to make a mixtape called Step Brothers, named in honor of the Will Ferrell and John C. Reilly movie. The acclaim for it, from critics and laypeople alike, opened a door wide enough for both rappers, who had been quietly respected as solo artists but languishing in record-label limbo — until 2010, Starlito had performed as All $tar, the name under which he made "Grey Goose," while Don Trip's "Letter to My Son" got him signed but not much else. Their song "Pray for Me," in particular, is warm and bone-chilling at the same time — thoughtful trap. Starlito has called the tape, which they made quickly with not many expectations, a "perfect accident."
On their followup — Step Brothers 2 (out Oct. 15), which they've made with more consideration — Starlito raps like his eyes are at half mast, or he's lying down, which makes his quick wit land even harder. Don Trip is sharper, but he reflexively wrings extra playing time out of his vowels and multiplies his syllables. His delivery is athletic, whichever of the several tones at his disposal he's decided to use. In "Ninja Focus," he says, "I go harder than a tortoise shell, my name ring like a doorbell, my wrist chilly like Hormel." While Starlito has a penchant for singing along with the vocal samples, Don Trip plays the straight man. But not that straight — he's the one who paraphrases Ghostface (though it's serious Ghostface) in "Where Do We Go."
The songs on Step Brothers 2 are littered with regret — in "28th Song," Starlito's sleeping with his girlfriend's sister and he's not proud of it. They both say they've sold drugs before, but that that doesn't mean you should. This isn't a new emotion for either writer. Five years ago, Starlito told The New York Times that his first single wasn't the launching pad he'd hoped it would be, for a couple of reasons: "I was having a hard time, for a second, being so closely associated with alcohol." Now, in "Bunk Beds," he says, "I've got more fake friends than songs with radio spins, and I'm not concerned with either until they try to play me again." And then there's the ladies. In "Open Your Eyes," laced with smooth saxophone, Starlito bemoans the state of his love life. "My girlfriend my Glock 9," he says. "Looking for a pretty woman with the wisdom of my grandmother."
The production is purple, almost lurid, with swelling synths, morbidly obese bass lines, scarily impersonal 808s. It's not exactly pretty — though "Leash on Life" cleans up nice — but its drama is Godfather levels of riveting. If you're not listening with every ounce of woofer available to you, then you're listening wrong. Step Brothers 2 is a Southern Gothic novel with many authors: Starlito and Don Trip certainly, but also Kevin Gates and Drumma Boy, also from Memphis; Burn One, from Atlanta; and Young Chop, from Chicago. "4x4 Relay," produced by Chizzy and Sarah J, doesn't sound like the rest of them, though — it's triumphant, the kind of song you make so you can become part of people's celebrations, and not just their ruminative commutes and daily grind. It's the kind of song you make once you've arrived.
Curt Friesen is a fourth-generation farmer in central Nebraska.
Grant Gerlock/for NPR
Curt Friesen is a fourth-generation farmer in central Nebraska.
Grant Gerlock/for NPR
Corn prices are down; the farm bill is stalled in Congress; and the farm boom appears to be fading. So there's a lot of uncertainly in the air as harvest season gets into full swing across the Midwest. But this is a time of year when farm families like the Friesens in Henderson, Neb., come together to focus on the big task at hand.
Everyone in the family has a job to do.
"Like my dad; he drives auger wagon," Curt Friesen says. "He drives auger wagon only. That's all he's done since 1976, I think. ... My wife, Nancy, she drives the combine; that's her job."
Curt drives a truck. So does his son-in-law, who's new on the farm. That's how the Friesens are harvesting 1,100 acres of corn this fall, about middle of the pack in terms of its size.
With roughly 97 million acres of corn to pick nationwide, farmers are pulling in family and friends as part-time help to haul in the crop.
Nancy Friesen grasps the orange joystick that controls the Friesens' giant John Deere combine, which is so big it makes the cornstalks look like matchsticks.
"It is a humongous piece of equipment," she says, "and it is intimidating. It's got all kinds of bells and whistles to let you know what's going wrong."
During corn harvest, it's all hands on deck on the Friesen family farm in Henderson, Neb. Nancy Friesen typically takes the controls of their John Deere combine.
Grant Gerlock/for NPR
During corn harvest, it's all hands on deck on the Friesen family farm in Henderson, Neb. Nancy Friesen typically takes the controls of their John Deere combine.
Grant Gerlock/for NPR
Nancy Friesen isn't totally comfortable in the driver's seat. Even a modestly priced combine costs $350,000, and most of the year she's in the garden, not the field. But she expressed some relief as she mowed down the cornstalks and watched the grain flow in.
"It is a good feeling when the corn is in the bin and we don't have to worry about it out here anymore," she says. "So many weird weather things can happen," like last year's drought, which was the worst since the 1950s.
The drought caused corn yields to dry up across the Midwest. The Friesens were lucky — irrigation saved most of their crop. But Albert Friesen, Curt's 92-year-old dad, knows firsthand how disastrous drought can be at harvest time.
When Albert Friesen started farming he used horses, not green tractors. In 1938, at age 16, he took over the farm after his dad died. The next year a drought hit and the crop was ruined.
"There was nothing here," he says. "Everything dried up. I went to Minnesota to pick corn by hand."
He brought home $69, just enough to keep the farm. That was a tough year.
"But I think we're in for some tough times yet again," he says.
In fact, 2013 could be the biggest corn harvest in history. The U.S. Department of Agriculture has estimated 13.8 billion bushels. But it's not clear what the crop will be worth by the time it's in the bin. Corn prices have been shrinking since the beginning of the year and are down around a three-year low.
That's happening just as Jason Lewis, the Friesens' son-in-law, is joining the family farm. A year ago, Lewis was in a college classroom. He wasn't a student — he was the professor.
"This time last year I was at California Polytechnic State University in San Luis Obispo, and I was probably teaching turf grass science class," Lewis says.
Now the 35-year-old Ph.D. from Kearney, Neb., is hauling corn and wearing earbuds so he can listen to podcasts while he's in the field.
During a break in the action, Nancy said she is grateful to have extra help on hand.
"I love it when I can hear Curt and Jason talking in the shop and he's got somebody to talk shop to," she says. "I love having the kids back. It takes the pressure off so much."
But Nancy couldn't talk for long. Albert had an empty grain wagon. Jason had a truck to fill. She plunged the combine into the standing corn. The harvest grind will go on for another four to six weeks.
"It's just pretty much harvest," Nancy says. "I try to clear the schedule. I just figure nothing really happens in October."
At least, not until the last load of corn comes in.
Grant Gerlock reports from Nebraska for NET News and Harvest Public Media, a public radio reporting collaboration that focuses on agriculture and food production issues.
STOCKHOLM/TORONTO (Reuters) - Canadian Alice Munro won the Nobel Prize for Literature on Thursday for her tales of the struggles, loves and tragedies of women in small-town Canada that made her what the award-giving committee called the "master of the contemporary short story."
"Some critics consider her a Canadian Chekhov," the Swedish Academy said, comparing her to the 19th-century Russian short story writer in a statement on its website.
Munro, reached by CBC Television in Victoria, British Columbia, said she hoped the award "would make people see the short story as an important art; not just something you played around with until you get a novel written."
The 82-year-old, who revealed in 2009 that she had undergone coronary bypass surgery and been treated for cancer, said however that she did not think winning the prize would change her decision announced early this year to stop writing.
"You know, I was always thrilled at whatever came along - like if I got published, I was thrilled. I still am, in a way," she told the CBC in a phone interview.
Munro, who was awarded the prize of 8 million crowns
WASHINGTON (AP) — Civil rights groups and members of Congress are pressing the Justice Department to renew its investigation of a 1985 office bombing that killed Palestinian-American civil rights leader Alex Odeh and injured seven people.
The American-Arab Anti-Discrimination Committee, the National Association for the Advancement of Colored People, Jewish Voice for Peace and others have launched a petition campaign asking Justice to further investigate the explosion, which demolished the committee's office in Santa Ana, Calif. The online petition has about 10,000 signatures.
California Democratic Rep. Loretta Sanchez sent a letter to the department in June and is seeking other lawmakers to sign a letter to Attorney General Eric Holder. The FBI identified suspects after the attack, but none were ever named or indicted.
"Whenever a leader for a civil rights organization is killed, it is the responsibility of our country as a whole— and a civil rights community as a whole— to stand up and demand that their killers be brought to justice and to insure that the U.S. Department of Justice does everything in its power to close the case," NAACP President Ben Jealous told reporters in a conference call Monday.
The DOJ, which has furloughed workers due to the government shutdown, had no immediate comment Monday, which also was the federal Columbus Day holiday. In 2010, the FBI described Odeh's killing in an agency news blog as "an active, ongoing priority investigation" and noted a $1 million reward.
Rep. John Conyers, D-Mich., said Monday that he wants the House Subcommittee on Crime, Terrorism, Homeland Security, and Investigations to convene a hearing on the bombing.
"We're going to pursue it vigorously and we're not going to let any more time lapse," Conyers said. "We're going to continue to help all of the organizations that are involved build up more and more support for us getting to where we ought to be in terms of a horrific, violent crime that has, I think, been put on the back burner for far too long."
At the time of the attack, the FBI said they believed the bombing was the responsibility of the militant Jewish Defense League. An attorney for the group denied the allegations and asked for a retraction from the agency. The FBI also linked Odeh's killing to two other acts of domestic terrorism in Brentwood, N.Y. and Paterson, N.J. that same year.
Odeh, the West Coast regional director for the American-Arab Anti-Discrimination Committee, was killed as he opened the door to his office on Oct. 11, 1985. The bombing occurred the morning after Odeh said on a Los Angeles television news broadcast that Palestine Liberation Organization leader Yassir Arafat was a "man of peace" because of his role in securing the release of passengers from the hijacked Italian cruise ship Achille Lauro in Egypt.
Odeh, who came to the U.S. from Palestine, was described by both Jews and Arabs as a nonviolent man who advocated compromise. According to the American-Arab committee, Odeh immigrated to the United States in 1972 and became a U.S. citizen in 1977. He was a poet and lecturer.
Republicans and Democrats are using the ongoing battle over the government shutdown and the debt ceiling to bludgeon vulnerable candidates with paid-messaging campaigns, efforts that offer a glimpse into their political playbooks before the midterm elections next year.
The attack campaigns, which have come in the form of online ads and robocalls in battleground states, also shine a light on how political gamesmanship can drive policy decisions in Washington.
For example, since the government shut down Oct. 1, House Republicans have held a series of votes to fund a handful of popular government programs with full knowledge that Democrats would reject them. While refusing to hold a vote on a “clean” funding bill to reopen the entire government, Republicans have voted to fund programs such as the National Park System and National Institutes of Health. Many House Democrats crossed party lines to vote for them, but the Democrat-led Senate has rejected the piecemeal approach.
It was a legislative strategy made perfect for a sound-bite world. By passing those minifunding bills, Republicans went on to accuse Democrats of voting to close national treasures like the Grand Canyon and opposing government funding for medical research and U.S. military veterans.
The Republican National Committee has launched a series of robocalls against red state Democratic lawmakers facing re-election in 2014. The calls, which went to constituents of Florida Rep. Debbie Wasserman Schultz, Senate Majority Leader Harry Reid, and Sens. Mark Begich of Alaska, Mary Landrieu of Louisiana and Kay Hagan of North Carolina, emphasized the delayed benefits of U.S. military veterans under the government shutdown and accused Democrats of “playing politics by cutting off our veterans and their benefits.”
The National Republican Senatorial Committee (NRSC), the top party group responsible for electing Republicans to the Senate, is also considering ways to use the shutdown battle against potentially vulnerable Democrats, all of whom voted against delaying the federal health care law as part of a House package to fund the government.
“They're in a Catch-22. Vulnerable Democrats like Mary Landrieu, Mark Pryor and Kay Hagan are terrified of losing their liberal base, but their campaigns bleed independent voters each second that they embrace Obamacare and refuse to negotiate and compromise,” NRSC spokesperson Brad Dayspring told Yahoo News. “They're tying themselves to an anchor.”
While Republicans are focusing pressure on 2014 House and Senate candidates, the Democratic National Committee is sponsoring an offensive that aggressively goes after GOP congressional leaders and possible presidential candidates.
Democrats last week launched a three-wave strike, with paid online ads against Republican Senate Minority Leader Mitch McConnell, House Speaker John Boehner, House Majority Leader Eric Cantor, and Sens. Marco Rubio of Florida, Rand Paul of Kentucky and Ted Cruz of Texas. (Rubio, Paul and Cruz aren’t up for re-election in 2014, but all have shown some interest in seeking the party nomination for the White House in 2016.)
The first wave came on Oct. 8, when the DNC sponsored online ads and robocalls that targeted each lawmaker in their home state.
On Oct. 9, they released a series of robocalls against Rubio, Paul and Cruz in Iowa, a strategic move because Iowa traditionally holds the first Republican presidential caucuses.
“Republicans in Congress like Ted Cruz, Marco Rubio and Rand Paul shut down the government over a week ago trying to gut Obamacare,” the voice on the DNC-sponsored robocall said. “Because of their shutdown, new USDA farm loans in Iowa have been halted, and Iowa farmers aren’t receiving payments for programs they’re enrolled in.”
Then, on Oct. 10, the DNC rolled out yet another series of Spanish-language calls to Hispanic voters against Cruz and Rubio in Florida, Texas, Nevada and Arizona that accused them of “hurting the Latino community.”
While not surprising, these campaigns shine a light on the parallel messaging battle being waged alongside the squabble on Capitol Hill, and how both parties are working hard to ensure the other team takes the fall for the blame. Depending on what works, expect to hear more of this — a lot more — in 2014 and beyond.
3D model reveals new information about iconic volcano
Public release date: 10-Oct-2013 [
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Contact: Steffi Burchardt Steffi.burchardt@geo.uu.se 46-018-471-2568 Uppsala University
The volcano on the Scottish peninsula Ardnamurchan is a popular place for the study of rocks and structures in the core of a volcano. Geology students read about it in text books and geologists have been certain that the Ardnamurchan volcano have three successive magma chambers. However, an international group of researchers, lead from Uppsala University, Sweden, has now showed that the volcano only has one single magma chamber.
The new study is published in Scientific Reports, the new open access journal of the Nature Publishing Group.
The 58 million year old Ardnamurchan volcano is an iconic site for the study of rocks and structures in the core of a volcano, which is why thousands of geology students from all over the world visit Ardnamurchan every year. Since the early days of modern geology the Ardnamurchan volcano is believed to have had three successive magma chambers (or centres) that fed hundreds of thin arcuate basalt intrusions, so-called cone sheets, that are exposed all over the peninsula.
The researchers from the universities of Uppsala (Sweden), Quebec (Canada), Durham and St. Andrews (UK), challenges the 3-centre concept using a 3D model of the subsurface beneath today's land surface. According to this model, the Ardnamurchan volcano was underlain by a single but elongate magma chamber.
Studying extinct volcanoes is a way for geologists to understand the interior of volcanic edifices and to gain knowledge on the processes that occur within active volcanoes today. It is therefore that the volcanic centres of western Scotland and northeastern Ireland were intensely studied by British geologists in the late 19th and early 20th century. It was in these eroded volcanoes that the foundation for modern volcanology was laid. Ardnamurchan in particular has an iconic status among geologists everywhere in the world. Geology students read about it in text books and visit it during field excursions.
"It came as a bit of a surprise to us that there is still so much to learn from a place that has received so much attention by geologists, in particular since we used the original data collected in 1930 by Richey and Thomas." said Dr Steffi Burchardt, senior lecturer at Uppsala University.
"Modern software allows visualizing field measurements in 3D and opens up a range of new perspectives. After projecting hundreds of cone sheets in the computer model, we were unable to identify three separate centres. The cone sheets instead appear to originate from a single, large, and elongate magma chamber about 1.5 km below today's land surface."
This magma chamber beneath Ardnamurchan was up to 6 km long and has the shape of an elongate saucer.
"These types of magma chambers are known to exist for example within volcanoes in Iceland have have been detected in the North Sea bedrock. Ardnamurchan's new magma chamber is hence much more realistic considering everything we have learned about Ardnamurchan and other extinct and active volcanoes since the time of Richey and Thomas" said Prof. Valentin Troll, chair in petrology at Uppsala University.
###
For more information please contact Steffi Burchardt, tel: +46 (0)18-471 2568, e-mail: Steffi.burchardt@geo.uu.se
Burchardt, S., Troll, V. R., Mathieu, L., Emeleus, H. C., Donaldson, C. H., 2013. Ardnamurchan 3D cone-sheet architecture explained by a single elongate magma chamber. Scientific Reports 2:2891. DOI 10.1038/srep02891.
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AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.
3D model reveals new information about iconic volcano
Public release date: 10-Oct-2013 [
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| Share
]
Contact: Steffi Burchardt Steffi.burchardt@geo.uu.se 46-018-471-2568 Uppsala University
The volcano on the Scottish peninsula Ardnamurchan is a popular place for the study of rocks and structures in the core of a volcano. Geology students read about it in text books and geologists have been certain that the Ardnamurchan volcano have three successive magma chambers. However, an international group of researchers, lead from Uppsala University, Sweden, has now showed that the volcano only has one single magma chamber.
The new study is published in Scientific Reports, the new open access journal of the Nature Publishing Group.
The 58 million year old Ardnamurchan volcano is an iconic site for the study of rocks and structures in the core of a volcano, which is why thousands of geology students from all over the world visit Ardnamurchan every year. Since the early days of modern geology the Ardnamurchan volcano is believed to have had three successive magma chambers (or centres) that fed hundreds of thin arcuate basalt intrusions, so-called cone sheets, that are exposed all over the peninsula.
The researchers from the universities of Uppsala (Sweden), Quebec (Canada), Durham and St. Andrews (UK), challenges the 3-centre concept using a 3D model of the subsurface beneath today's land surface. According to this model, the Ardnamurchan volcano was underlain by a single but elongate magma chamber.
Studying extinct volcanoes is a way for geologists to understand the interior of volcanic edifices and to gain knowledge on the processes that occur within active volcanoes today. It is therefore that the volcanic centres of western Scotland and northeastern Ireland were intensely studied by British geologists in the late 19th and early 20th century. It was in these eroded volcanoes that the foundation for modern volcanology was laid. Ardnamurchan in particular has an iconic status among geologists everywhere in the world. Geology students read about it in text books and visit it during field excursions.
"It came as a bit of a surprise to us that there is still so much to learn from a place that has received so much attention by geologists, in particular since we used the original data collected in 1930 by Richey and Thomas." said Dr Steffi Burchardt, senior lecturer at Uppsala University.
"Modern software allows visualizing field measurements in 3D and opens up a range of new perspectives. After projecting hundreds of cone sheets in the computer model, we were unable to identify three separate centres. The cone sheets instead appear to originate from a single, large, and elongate magma chamber about 1.5 km below today's land surface."
This magma chamber beneath Ardnamurchan was up to 6 km long and has the shape of an elongate saucer.
"These types of magma chambers are known to exist for example within volcanoes in Iceland have have been detected in the North Sea bedrock. Ardnamurchan's new magma chamber is hence much more realistic considering everything we have learned about Ardnamurchan and other extinct and active volcanoes since the time of Richey and Thomas" said Prof. Valentin Troll, chair in petrology at Uppsala University.
###
For more information please contact Steffi Burchardt, tel: +46 (0)18-471 2568, e-mail: Steffi.burchardt@geo.uu.se
Burchardt, S., Troll, V. R., Mathieu, L., Emeleus, H. C., Donaldson, C. H., 2013. Ardnamurchan 3D cone-sheet architecture explained by a single elongate magma chamber. Scientific Reports 2:2891. DOI 10.1038/srep02891.
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| E-mail
| Share
]
AAAS and EurekAlert! are not responsible for the accuracy of news releases posted to EurekAlert! by contributing institutions or for the use of any information through the EurekAlert! system.
Texas Industries (TXI) has a rather simple business model, and for a stock that's down over 15% in just a couple weeks it's hard not to get excited. However, we have a real love-hate relationship with materials companies. On one hand they are heavily tied to the broader economy, and on the other hand they are instrumental to economic growth.
So, the point is that even though Texas Industries has had significant tailwinds related to the broader economy, it's still struggling to see meaningful EPS growth and will likely see more downside. Even though its key operations are in one of the fastest growing states of Texas, the company has managed to see EPS decline by an annualized 58% over the last five years. There appears to be too much optimism surrounding the company's ability to expand margins.
But don't feel too bad for Texas Industries' investors, the stock is still up over 80% over the last two years.
It's more than just a hiccup.
Texas Industries cement production/distribution facilities are heavily focused on Texas and California, while holding about 32% of the cement market share in Texas. And so, the overall Texas economy can have a big bearing on how Texas Industries performs. But, Texas, as a state, has been bustling. It has seen some of the best growth in terms of GDP and residential construction, and yet, Texas Industries has seen revenue fall over 30% over the last five years.
Meaning the bullish rebound in residential construction has done little to prop Texas Industries up. The question becomes; is there any catalyst that can increase sales?
In its major markets, the company is faces considerable competition from the likes of larger competitors Martin Marietta Materials (MLM), Vulcan Materials Company (VMC) and Cemex (CX). The main problem in competing with larger competitors is that Portland cement is Portland cement. Meaning that quality of product has little to do with sales, the key driver is price. This leaves Texas Industries somewhat handcuffed from a margin perspective.
Making things worse is that Texas Industries can do little to spur demand, with its sales reliant on the broader economy.
In regards to cement prices, Texas Industries continues to underperform the market. The company is heavily tied to cement, which accounts for 54% of sales, and another 33% of sales are from ready-mix concrete, which has cement as the major input.
Texas Industries pre-sold a large amount of cement at below market prices to start up its Hunter Plant. Cement prices are expected to see compressed prices through fiscal 2014 due to the Hunter pre-sales. And the news gets worse. Once the pre-sales are cycled through, the ability to increase prices to market levels will only be limited to roughly 30% of volume in Texas.
Another factor likely to affect Texas Industries over the long-term is imports of cement, particularly in Texas. We see lower-cost producers from outside of Texas looking to take advantage of the strong Texas market, hurting home-grown producers such as Texas Industries. On the earnings call, CEO Mel Brekhus addressed this issue:
"Long term though, I really do think that the State of Texas will probably need imports, especially if these trends continue that we're seeing. And when I say imports, I mean, imports from outside of Texas, whether it be South Korea, Greece or Indiana, Alabama, Oklahoma, we're going to need those imports. And I do think it will have an impact on pricing, in especially the Houston market."
Besides competition and cement prices, Texas Industries faces a difficult regulatory environment in California. California has a number of environmental initiatives that make operating in the state difficult for Texas Industries. CEO Mel Brekhus said as much on the company's earnings call:
"On the pricing side, it's been a slog in California. It's been very difficult to try to get prices up during this difficult time. But there are costs associated with doing business in California that are extraordinary."
Lofty expectations create an opportunity
Shares in Texas Industries have taken a hit over the past week after the company missed earnings expectations. The company reported EPS of $0.01, but that came from a $0.08 gain related to the sale of real estate. Without the real estate sale, EPS would have been a loss of $0.07. This is only 1 penny better than last year's $0.08 loss in the same quarter. Again, nothing positive to report on the earnings front.
The expectation of a rapid expansion in margins creates a big opportunity for the company to miss expectations. The company is targeting a gross margin of 15% for fiscal 2014, with SG&A as a percent of sales expected to come in at 8% or less. Currently, gross margin is at 11% for the TTM and SG&A as a percent of revenue is at 9.1%. We haven't seen a full fiscal year gross profit margin anywhere close to 15% since pre-2009, and we haven't seen SG&A as a percent of revenue down to 8% since pre-2006.
A very rich company
From a valuation perspective, Texas Industries is trading very richly, at half-decade highs. Its p/b is 2.1x and p/s 2.3x, compare this to the five year averages of 1.5x and 1.6x, respectively.
The company's also trading at 28x ev/ebitda; compared to some of the other major materials companies that's quite expensive. These include CRH (CRH), Smith-Midland (SMID), Monarch Cement (MCEM) and Cemex , which, together trade at an average 11.25x ev/ebitda.
EBITDA margins are down around 11.5% and it doesn't look like they'll be able to get back to the 18% plus that investors are desperately hoping for. If EBITDA margins remain compressed at 11.5% levels, based on fiscal 2014 sales estimates, the stock will still be trading at outsized multiples -- 21x ev/ebitda.
The upside for Texas Industries is very limited given what we're already seeing at the company. We just don't see any catalysts that can help drive the top line any more than it already has, and margin expansion expectations seem overexaggerated.
Where we could be wrong
Noted value investor Mason Hawkins and his Southeastern Asset Management own 28% of the company. Going against him is not typical for us, however, he has enjoyed the 80% run over the past two years.
If total cement demand returns to pre-2007 levels, which would boost the top- and bottom-lines for Texas Industries. However, those levels would assume a very robust, bubble-like, level of homebuilding.
All in all
Even an 11.25x multiple on 2014 EBITDA estimates -- using a generous 14% EBITDA margin -- puts intrinsic value at $28, which would cut Texas Industries' stock price in half. But, the other issue is sales could also come in below estimates (especially in the context of a slowing housing boom), and how do we grow margins by 400 basis points basis points in less than a year (which is what the market is expecting)?
There is little appeal to the company, besides Southeastern's stake and the fact that it operates in one of the strongest states in terms of growth. However, the top line upside will continue to be constrained by a slowing real estate market and below-average cement market prices. The company should begin to trade more in line with peers on a valuation basis, and continued margin pressure will only exacerbate the downside move. We see Texas Industries as being overvalued and the recent selloff as the start of a stronger move to the downside.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.(More...)
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