Appaloosa Management adds to Whirlpool holding
Appaloosa Management upped its position in Whirlpool Corporation (WHR) in the third quarter that ended in September 2014. The position accounts for 4.29% of the fund’s total third-quarter portfolio. The fund at present owns 2 million shares, up from 1.01175 billion shares in 2Q14.
Overview of Whirlpool
Whirlpool Corporation (WHR) is the world’s leading global manufacturer and marketer of major home appliances, with annual sales of approximately $19 billion in 2013. Its reportable segments consist of North America; Latin America; Europe, Middle East and Africa (or EMEA); and Asia. Its leading portfolio of brands includes Whirlpool, Maytag, KitchenAid, Brastemp, and Consul, each having annual revenues in excess of $1 billion. The company said in its 10Q that its strategy is to extend its business by offering products and services that are dependent on and related to its core business and expand into adjacent products such as Affresh cleaners and Gladiator GarageWorks.
Whirlpool expands through acquisitions
In July, Whirlpool agreed to pay around $1 billion for a controlling stake in smaller Italian rival Indesit. It said the acquisition will “position it for sustainable growth in the highly competitive and increasingly global home appliance market in Europe.” Whirlpool also completed its acquisition of a majority interest of 51% in Hefei Rongshida Sanyo Electric Co., Ltd., a leading home appliance manufacturer based in China.
Posts 17% increase in profits
Whirlpool shares fell in July after the company saw its profit fall 9.6% in the second quarter and reduced its forecast for the full year. However, its latest third-quarter results saw a 17% increase in profits. Shares rose despite revenue and earnings missing on estimates. Whirlpool’s management noted that “results were mainly driven by revenue growth, ongoing cost productivity and the benefits of its cost and capacity initiatives.” It saw strong demand for its products in the United States and said it sees slow recovery in Eurozone. Management added that the acquisitions in Europe and China could create “transformational opportunities.”
Appaloosa’s positions in 3Q14
Appaloosa Management added new positions in NXP Semiconductors NV (NXPI), Lorillard Inc. (LO), Alibaba Group (BABA), and Shire Plc (SHPG). Top exits were Expedia, Inc. (EXPE), and American International Group (AIG). The fund added to its stakes in Whirlpool Corporation (WHR) and Priceline Group Inc. (PCLN). Top stake decreases were in American Airlines (AAL) and The Walt Disney Company (DIS).
The next part of this series will discuss Appaloosa Management’s position in Priceline Group Inc. (PCLN).