Mr. Silversteyn: Along with other stocks that are considered to be cyclical or basic materials related, the group took a beating at the beginning of the year as investor concerns about a recession in the US, slowing economic growth in Europe and elsewhere, and the credit crunch spread to the market. More recently the specialty chemicals stock prices stabilized and are beginning to develop an uptrend. I think the fourth quarter results, which were reported in late January, early February were largely in line with or above expectations. And I think, right now, investors are looking for a reason to buy rather than a reason to sell, so I sense a bit of a change in the emotions of investors when it comes to specialty chemicals.
TWST: As we look at the group from an operating point of view, have they
performed decently given both the slowing economy and higher commodity prices?
Mr. Silversteyn: The performance has really varied. Companies with a lot of
exposure to North America, let's say with more than 50% of their revenues coming
from North America, companies with exposure to the construction market,
particularly residential construction, and the automotive market, have seen
their performance suffer, with top lines declining. Raw materials obviously
pressured margins; companies that did not have adequate pricing power due to
either the commodity nature of their products or the highly fragmented
competitive landscape have had difficulty passing on those raw material costs to
customers. On the other hand, companies with significant exposure to
international markets, higher growth markets like electronics, aerospace and
life sciences and companies with lower petrochemical-related raw materials
exposure have done well for the most part, probably exceeding expectations.
Tickers included in this excerpt: CCMP, CEM, ECL, FMC, FUL, HPC, SIAL, VAL
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