Just shorted this stock
I realize that I have no advantage against wall street and professional traders…I own a decent size appliance business with multiple stores and I only buy and sell stocks in an industry that I am familiar with…Here is my reasoning for going short:
No one is going to buy Whirlpool…Stock has run up too much…The only potential buyers would be Haier, LG, or Private Equity…GE was asking 8B and the most they could get was 4B…The Koreans, Asians, and investment bankers will not overpay for this company…It has run up too far on speculation
Commodity costs are and will continue to put pressure on WP…Upcoming Industrial Metal ETF’s will cause havoc on their fixed cost…Consumer is too fragile and Whirlpool will have a hard time passing off increased cost
Some bozo at WP sent out 2011 pricing in October 2010. This would not have been a problem except for the fact that WP reduced pricing on many skus…This will have huge impact on Q4 sales because customers were waiting until 2011 when they could buy at lower price…
Just to give you an idea:
20cf Kitchenaid French Door…our old cost $2k…new cost $1,400.00
Listen to the last conference call…THEY HAVE MAJOR INVENTORY ISSUES
Repositioning Jennair has been a huge flop
We are in a major metropolitan area(that according to the experts is doing better then other areas)…Sales are very soft with all appliance dealers in our city
E-Star Tax Discounts are done and pent up demand is gone
Appliance sales will come back at the end of the next housing cycle…Housing starts are still very soft and it will take 6-9 months was the builders start moving dirt…My guess is that housing starts will get better in mid 2012 therefore appliance sales will not ramp up until Q1 2013
Where are all my haters now....time for the shorts to make some $....As I have said all along domestic sales are terrbile(down 1 %)....If S.A and Asia had not increased revenue 18 and 9% respectively this stock would be at $70.00 today. I will tell you that Jan sales have continued to slide....I do not think things will improve domestically until 3rd/ 4th qtr 2011. Look for even more disappointing number 1st qtr 2011...Price increase does not go into effect until April 1st so 1st qtr is going to be very bad....As previously mentioned the price increase does not impact sales of most popular sku's.... This stock will hit high sixties/low seventies in the next four months...I would not buy this stock until 3rd qtr 2011
I'm not a hater, long term I like the stock, but I was out of it since the Dec puts I sold last year expired, and now I have sold the Sept 85 puts. So it's possible that we will both make money.
I have posted here before why I like WHR. They remained profitable through a severe recession that hit the industries around them particularly hard, and they are diversified not only in production but distribution - they can make money selling units overseas even if the economy in the US is poor. I like being short the puts because I think that the recovery will be slow, so even if there is not much appreciation, I'll get a nice premium.
Whirlpool will raise guidance tomorrow morning and traders with shorts and puts are going to get killed. That, along with beats in south america, china, india,and mexico,and strength building in europe and u.s.,make this earnings report a big success for the longs.
I see a lot of desperate reaching, thrown out by someone who "allegedly" is in the know. I can throw a lot of big words out there to support my put/call buying, but if you actually read this drivel, you will see a lot of dreaming here.
"No one is buying Whirlpool anymore, because people are gonna buy Chinese washing machines that you can run with your iphone".
Yeah. Right. Pass the pipe.
Amauer glad to see you are getting smart and hid your profile.....how do you think i knew you worked for whirlpool...pretty easy to plug your name into google with whirlpool and bam..your name pops right up...don't worry I won't tell Jeff that his new trainee is already talking s*** to one of his best customers..probably not a good idea
P.S..my name is not bryan...i am a little smarter then that
The stock has moved up 3 points(from my entry) strictly on momentum from the broader market...I am expecting a pullback after earnings disappointment next week...
more reasons to short
regional rep told me that independents, box stores, and multifamily were very weak in 4qtr...said the direct sales to home builders performed a little better then expected..overall tough quarter in US..I do not know anything about international sales
8.8% average price increase April 1 impacts only SKU's are not popular sellers...5% of WHR sku's account for 80% of our sales...our cost on these items is locked in for all of 2011 at 2010 price..I know box store will not be paying more for these items...assuming metal cost/labor/inflation are all in place this is will have negative impact on earnings..the fact is that WHR has no pricing power against LG, Samsung, and Haier
To those that are offering up earning estimates that are 10-20% stronger then last year you need to wake up a get a clue...WHR is going to have a hell of a time just matching 2010 numbers...Thanks to obama and printing press the government was handing customers $ to buy appliances in early 2010....sales comps for 1st and 2nd qtr will be very difficult to match...these sales were all e-star related and WHR is strong player in this market..
When we had the E-Star weekend in our state we sold three months worth of appliances in only three days....these e-star state speicals were all in 1st and 2nd qtr of 2010...
it is going to be a tough 2011...
Gen X and Gen Y treat appliance sales like cell phones...the days of shopping for quality made US built appliances is done....kids these days want the latest cool gadget..they don't care if the product was built in a factory by a twelve year old as long as it is cool....baby boomers are moving to nursing homes and the kids all want the brands they see on there television cell phone and tablet pc...Ask any twenty five year old to pick between whirlpool and LG and my money is on LG all day long...
LG already has smart phone apps that interface with appliances...kids want what is cool.....
Visit Kitchenaid's website(one of the worst websites in the history of the internet...ax the blender) and tell me this company has a clue when it comes to technlogy and being cool...hell no
If you want a suggestion...go to your boss's boss and tell him that WHR should sign a deal with apple to use its name and technology on its products...try installing an ipad on the front of your fridge...anything..just make it cool....If WHR does not respond quickly the brand will go bye bye
let the selling begin next week after Q4 call...
WHR was supposed to earn $8-9/shr in 2010 and disappointied..
WHR has banked $6.99 in the first 3 qtrs of 2010, unless Q4 is a massive bomb, they should hit $9.25-$9.50 in 2010. According to TD, 2011 estimates range from $10-$13, with an avg of $11.
Again, how you can short a company with a forward multiple of eight is beyond me. Thesis works 3 years ago, but not now.
I think Whirlpool was the clear winner, along with LG, for Black Friday. Think they should have nice revenues this quarter, but less sure about profitability - the International group has a huge influence on that.
When input cost are rising rapidly, sometimes management tries to hike prices to compensate, but with the consumer still pressured and emerging markets are raising interest rates, you think price increase will stick? Look at gas prices and food inflation, I don't appliacne price increase will stick.
shipments were only up 3.7% in November...as far as i know numbers have not been released for dec. ...i think putting an 11 handle on 2011 earnings is a little ambitious...WHR was supposed to earn $8-9/shr in 2010 and disappointied..
i agree with you that they should not be raising prices but to slash prices on some models by 20-30% in some cases smells of desperation
appliance companies very rarely lower prices..20+% is unheard of