Among the investors giving their stock tips in the second installment of Barron's 2008 Roundtable is Meryl Witmer of Eagle Capital Partners. She offers six stocks and three are also found in the "Current Holdings" menu on the right hand side of this blog.
Two of my recent stock investments are American Eagle Outfitters (AEO/NYSE) and Whirlpool (WHR/NYSE). And I mentioned that they were owned by Witmer's firm when alerting Controlled Greed readers of the purchases.
Here's what Witmer tells Barron's about Whirlpool:
It's the largest brand-name appliance maker in the U.S. The company has a fast-growing presence in Europe, Latin America and Asia, and the largest market share in India and Brazil. Its worldwide share is about 20%, second to Electrolux, with about 13%. Whirlpool acquired Maytag in '06. It originally expected to achieve $350 million to $400 million of run-rate efficiencies from the acquisition by the end of last year but since has said savings will significantly exceed $400 million.
Maytag was known for underspending on product
development, while Whirlpool has focused on innovation since Jeffrey
Fettig took the reins in 1999. It had a large pipeline of new products
that it didn't have the capacity to produce. Now, many of those
products are being introduced under the Maytag brand. The company's
results were hurt in '07 by rising commodity prices and falling home
prices and sales. Yet Whirlpool produced record income in the first
nine months, and expects to do so for the year, helped by great
international results. Only 20% of Whirlpool's U.S. operations are
dependent on new housing. This is a replacement business. When your
washing machine breaks, you buy a new one.
Regarding American Eagle, she likes the company's management, the fact the company has been buying back stock (as have the Chairman and CEO), has a "fantastic" (her word) balance sheet and cheap multiple.
Another one of her stock picks is 3i Group PLC -- which trades in London under symbol III. She recommended 3i back in 2005 (I soon bought it after that). Witmer eventually sold it for a gain but has bought it again now that it's back under book value.
Regular readers know I've never sold it. Why? Because it never traded much above book, and also started doing deals in Asia -- especially Mainland China and India -- and I saw it as a backdoor play on Asian growth.
Among Witmer's thoughts on 3i:
3i didn't chase deals in the frenzied buyout markets; they were net sellers. More realistic expectations on the part of sellers in midtier companies should provide a continued source of buyout investment opportunities. In addition, demand for growth capital remains strong. In the last few years, the company has improved its earnings power by broadening its portfolio geographically and by business line. It has spent to build up local investment teams in India, Asia and the U.S. without the benefit of a lot of investment return.
Asia is approaching 10% of assets under management.
3i has also launched two third-party investment funds in infrastructure
and publicly traded stocks, which represents 16% of assets and will
generate a growing stream of management fees.
For my money, 3i Group is a more attractive way to play the buyout/venture capital sector.
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