David Tepper is one of the great hedge fund managers and made a killing last year in China stocks.
In November, filings revealed he to a huge stake in appliance-maker Whirlpool Corp, buying a position worth $432 million at a reported price of $76.60. That's about 10% of the company, which makes brands like Maytag, Bauknect and KitchenAid.
it's a company that I've written about extensively over the years but not as a stock. It's because appliance spending is a good economic barometer.
There was bad news today in the earnings report and shares are down 8.5% to $74.00 in the pre-market.
The company is generally seen as a proxy for housing, as new home owners tend to buy appliances. That sector is in a brutal recession right now due to the post-pandemic rise in interest rates.
Perhaps the Tepper investment is a bet on a housing rebound or normalization as we're certainly near a trough (he's usually a macro investor). Perhaps he thinks Trump will stack the Fed and lower interest rates by 150 bps. Perhaps it's a tariff re-shoring story as foreign appliance imports are locked out.
It's not clear as he hasn't gone on the record with the reasons for the share purchase. Here is the Q4 company deck, making a case for what it's doing right.
In any case, company fundamentals aren't great. That company's Q4 results:
- Revenue $4.10B vs $4.27B with 2025 full-year sales results down 6.5% y/y
- Ongoing EPS $1.10 vs $1.52 expected
- 2026 revenue guidance $15.3-15.6B vs $15.6B consensus
- 2026 ongoing EPS guidance $7.00 vs $7.11-$7.21 consensus
The spin in the release looks forward:
“With a challenging 2025 behind us, our confidence for 2026 is based on our recent successful product launches, reduced promotional intensity and a gradual recovery of the housing market," says CEO Mark Bitzer in the release.
If it can hit those targets, it's fairly cheap, trading at 10.5x ongoing earnings and a nearly 10% FCF yield at the guidance midpoint. On free cash flow, the company is aiming to generate 7% of sales, which would $1.14 billion at its $16.3B sales target, or a 25% FCF yield.
Another promising spot is price-to-sales at 0.3x. Historically, it's traded in a 0.4-0.6x range.
The problem is that net debt to EBITDA is at 5.5x and all the free cash (or asset sales) will need to go to deleveraging with the company talking about $400m of debt payments this year (or nearly all the forecast free cash flow).
On the macro side, here is the regional look:
- North American Q4 sales down 0.9% y/y, with the company highlighting Canada as a weak spot
- Latam sales down 4.6% y/y
- Global sales up 8.0% y/y
Overall, it continues to be an interesting name but I still find it surprising that Tepper is making a play as it's cheap but not extremely cheap and it's hard to have much confidence in management.
The good news is that today you can buy it cheaper than one of the all-time great fund managers.
