Whirlpool Stock Zooms and Some Big Names are Aboard -- What Gives?
Celebrity investors are rarely interested in shares of big name appliance maker Whirlpool (WHR), headquartered in the sleepy town of Benton Harbor, Mich., and right now, few analysts suggest that the rest of us should be either. But Whirlpool has picked up several notable fans – and a 25% share price gain -- in the past three months alone, as seen in this stock chart.
Hedge fund manager David Tepper of Appaloosa Management executed an initial investment last quarter that made Whirlpool about 1.65% of his portfolio. William D. Perez, a Whirlpool director, spent about $196,000 this year to buy more shares. And Raymond James Analyst Sam Darkatsh upgraded Whirlpool shares to “outperform” at the end of July, making him the rare one from a major institution showing more than a hold rating.
Tepper is best known for making money in distressed companies, and Whirlpool only mildly fits the description. European angst has caused a big drop in sales there, and while sales were up in North America, they were not in Latin America, a place that’s supposed to be a growth engine. Free cash flow this year turned negative for the first time in a decade. But its dividend, which now yields 2.8%, remains easily covered by earnings. YCharts Pro gives Whirlpool perfect 10s for fundamentals and share price value.
Darkatsh contends that restructuring measures will soon reverse that cash flow problem and help profit margins. A lot of investors interested in Whirlpool buy it as a housing recovery play, and the company is a key component in some housing-focused funds. Right now, though, Whirlpool shares are priced more like a company in trouble; its PE ratio remains below 10.
Perhaps Robert Olstein knows something Tepper doesn’t. Olstein, a value investor, was one of the few big-name buyers of Whirlpool in the past couple of years. He sold his stake (which never amounted to a big part of his portfolio anyway) at the end of last year.
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