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Teachers fund opens new stake in TRW Automotive Holdings

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Mar. 12 2015, Updated 2:06 p.m. ET

Teachers’ new stake in TRW Automotive Holdings

The Ontario Teachers’ Pension Plan, or Teachers, added a new position in TRW Automotive Holdings (TRW) during the quarter that ended in December. The position accounted for 0.12% of the fund’s total portfolio.

TRW has 0.11% exposure to the iShares Russell 1000 Value ETF (IWD).

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Overview of TRW Automotive Holdings

TRW Automotive Holdings supplies vehicular systems, modules, and components to original equipment manufacturers and related aftermarkets around the world. The firm mainly designs, manufactures, and sells active and passive safety-related products. Products often integrate electronics components and systems. Four segments make up the business:

  • Chassis Systems
  • Occupant Safety Systems
  • Electronics
  • Automotive Components

TRW said that 83% of its 2013 end-customer sales were made to major original equipment manufacturers.

TRW to be acquired by ZF Friedrichshafen

Livonia, Michigan-based TRW said last year that it was going to be acquired by German auto parts maker ZF Friedrichshafen, also known as ZF Group, for approximately $13.5 billion. A press release notes that the transaction will “create a global leader in the automotive supplier business with 138,000 employees and pro forma combined sales of approximately 30 billion euros ($41 billion).”

The deal is still awaiting regulatory approval. A newswire report notes that ZF Group sold its steering systems business to Robert Bosch in September 2014 to satisfy regulators looking into its buyout of TRW. The transaction is expected to close in the first half of 2015.

In September, TRW sold its engine valve business to Federal-Mogul Holdings (FDML) for $385 million.

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Sterne Agee bullish on aftermarket auto parts retailers

Sterne Agee analysts were bullish on aftermarket auto parts retailers such as Advance Auto Parts (AAP), AutoZone (AZO), and O’Reilly Automotive (ORLY) last year. Analysts Ali Faghri and Michael Ward said, “The aftermarket auto parts group offers positive industry demand tailwinds, attractive valuations, e-commerce protection and a high degree of fragmentation with continued market consolidation opportunities.” They added, “With gas prices at multiyear lows, we expect vehicle miles traveled to continue to grow, increasing demand for auto parts while providing relief to the low-income consumer.”

TRW’s 4Q14 sales fell 3%

TRW posted fourth-quarter 2014 sales of $4.3 billion, a decrease of 3% compared to the same period a year ago. It reported GAAP (generally accepted accounting principles) fourth-quarter net losses of $360 million or $3.22 per share. In the same period a year ago, TRW reported net earnings of $363 million or $3.00 per diluted share. For all of 2014, sales were $17.5 billion, an increase of 1% over 2013.

The next part of this series will look at the Teachers’ position update in Macerich Co.

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