Warren Buffett, Smart Money Love This Duo

It was around this time that Kodak surfaced from Chapter 11 after a Manhattan court accepted its reorganization plan in late August. The company’s creditors also approved Kodak’s plan to focus entirely on its corporate imaging business earlier in the month. Post-bankruptcy, the new plan lowers debt by a little over $4 billion by paying secured creditors completely, paying unsecured creditors about 5% of total existing debt, and not paying previous shareholders.

It’s clear that BlueMountain is here for the value. David Kurtz of Lazard Freres & Co. pointed out a couple months ago that the new Kodak should have an enterprise value between $785 million and $1.38 billion, and according to this Seeking Alpha author, the company is expected to generate sales of about $2.7 billion a year.

These estimates indicate that for every dollar of annual sales, around 40 cents of enterprise value is generated; this ratio is about 50% cheaper than peers Xerox Corporation (NYSE:XRX) and Canon Inc. (ADR) (NYSE:CAJ), on average. With over one-fifth of Kodak’s outstanding shares under ownership, Andrew Feldstein and Stephen Siderow have the potential to realize a big payday over the next few years from this investment.

Disclosure: none