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Guru Raises Position in Packaging Company

Guru Steven Romick added 880,670 shares of Owens-Illinois Inc. ( OI ) in the fourth quarter.

Owens-Illinois manufactures glass containers with 80 glass-manufacturing plants and 27,000 employees located in 23 countries across the globe with 600-plus new product solutions launched each year. The company creates glass containers for beer, wine, spirits, nonalcoholic beverages, pharmaceutical and chemical and food as well as tableware glass.

Owens-Illinois has a market cap of $1.94 billion, an enterprise value of $7.64 billion, a P/B ratio of 2.52 and a quick ratio of 0.76.

Owens-Illinois has a few good signs, according to GuruFocus. The company's price is close to a five-year low. The P/B ratio is close to a one-year low at 2.71 compared to the one-year low of 2.7. The company's P/S ratio is currently 0.35, which is very close to the five-year low of 0.34.

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OI 15-Year Financial Data

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Peter Lynch Chart of OI

According to GuruFocus, Owens-Illinois has several warning signs that need to be brought to investors' attention. The company's cash-to-debt ratio is 0.05, ranking it below 86% of the 316 companies in the Global Packaging & Containers industry. The per share revenue has been in decline over the previous three years, which is short term but still noteworthy. The gross margin has been in decline at an average rate of -1.6% annually over the previous 10 years. Owens-Illinois is also continuously issuing new debt. In the previous three years the company has issued $2.1 billion of new debt, which is a negative sign.

Romick graduated from Northwestern University with a bachelor's degree in education. Shortly after graduation, Romick began his investment career working as a security analyst for Kaplan, Nathan & Co. Romick then seized an opportunity to work for FPA Funds where he began to develop his contrarian defensive investment strategies.

Romick currently serves as portfolio manager of the FPA Contrarian Value Strategy, including the award-winning FPA Crescent Fund. He is also the portfolio manager for the FPA Hawkeye Strategy, co-portfolio manager for the FPA Multi-Advisor Strategy and portfolio manager for Source Capital Inc.

Owens-Illinois is also traded in Germany.

Below is a Peter Lynch chart for Owens-Illinois.

Romick continued to purchase Owens-Illinois in the fourth quarter of 2015 despite the fact that the company has several severe warning signs. The company has been declining in price over the previous eight years. Owens-Illinois' share value was nearly $60 in April 2008. Since then the company has been declining at an average rate of close to 14% annually.

Owens-Illinois is a high variance, volatile investment, and investors should proceed with caution.

Cheers to your investment success.

Disclaimer: Author does not own any shares in this holding.

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About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .

This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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