ISP: A Hidden 'Diamond in the Rough'

There are companies in the specialty chemical world that have good technologies and product applications. Their unique niche and technologies enhance the performance of their customer’s products. I call them the “real specialty chemical” company. Such uniqueness should have value. However, the “Wall Street mind-readers or investing aficionados” have not had much penchant for them. One can only conclude such an oversight is due to lack of the investors understanding of the technologies of such companies. One such company is International Specialty Products, Inc.

In 2002 ISP went back to being a publicly held company to being a privately held company. Their sales from 1999 to 2001 were around $787 million for each year with profits going through its cycles. In 2007 ISP revenue was about $1.6 billion about 10% revenue growth per year. Samuel Heyman being an astute investor has had margins to his liking in the last nine years with his management. If the margins were not there, he would have unloaded the business.

Since ISP is privately held company and away from the daily Wall Street scrutiny, they have also managed to stay under the acquisition radar. I believe that 2009 or 2010 may be the year when someone will realize their full potential and buy them out. It would have to be a company, which values technologies and would want to cross-fertilize ISP technologies to other applications and realize their full potential.

Girish Malhotra, PE

EPCOT International