david tepper walked into whirlpool and discovered the creditors were senior to his geniusβ¦
that's the whole story. he's compounded at roughly 25% since founding appaloosa in 1993. he bought american banks in 2009 when everyone else was pissing blood into a bucket. he made panic look like an asset class. he understood that when a balance sheet is mispriced badly enough, fear becomes collateral. i respect the man.
so what the fuck was he doing in whirlpool?
jenny harrington, sure. she was the opening act. competent, not genius. watch my original post, jenny don't be hasty she was the visible mistake. the serious income mandate. the value manager recommending whirlpool because the stock was down, the dividend looked fat, and the housing recovery was supposedly waiting somewhere around the next corner like a well-behaved labrador.
of course, i thought she was bat shit crazy. not a little early, but wrong in the way investors are wrong when they look at the equity price first and the balance sheet second. i saw debt sitting above the equity like a fat bastard at the head of the table, eating first. i saw a clown show.
two years later, the tape has done what the tape does. itβs made my vulgar adjectives unnecessary. whirlpool was $100. today itβs around $40. the dividendβs been suspended for the first time in fifty-five years. net debt went up, not down. profit took the opposite path. it went down, not up. the housing recovery didnβt arrive.
jennyβs mistake wouldβve been enough for a clean little victory lap. but victory laps are boring, and they usually teach the wrong lesson. anyone can dunk on a television stock picker after the fact. $tlt, anyone. thatβs not the point. this was supposed to be a tidy little story about cnbc yield tourists getting rinsed.
except david fucking tepper got in the drum. and heβs not some yield tourist. he doesnβt need a dividend story. appaloosa bought whirlpool and all iβve read since is narrative. a tariff thesis. whirlpool makes most of its us product domestically, tariffs would punish lg and samsung and hand whirlpool a protected profit pool. the fed would cut, mortgage rates would fall, housing turnover would recover, and the replacement cycle would restart.
markets are full of such stories. little narrative booty calls telling you the arithmetic can wait. but greatness has a law. it doesnβt flirt. the law is the law. if i buy the entire business at the prevailing share price and accept the debt liability, whatβs the cash return on my investment? and is it enough?
