Iridian increases its holdings in Masco by a staggering 394%
Key takeaways from Iridian Asset Management’s 4Q14 Holdings (Part 6 of 8)
Iridian’s holdings in Masco
According to its recent 13F filing made by Iridian, the fund increased its position in Masco Corp. (MAS) from 2,238,680 shares to 11,052,010 shares, representing a 394% increase. The holdings in Masco form 2.59% of Iridian’s 4Q14 portfolio. The SDPR S&P Homebuilders ETF (XHB) has a 3.13% holding in Masco.
An overview of Masco
Masco Corporation is involved in installing, distributing, and manufacturing home improvement and building products. The company manufactures a wide range of building and home improvement products, which include windows, architectural coatings, cabinets, and faucets. It also installs insulation for the market revolving around new home construction.
Masco distributes its products via various channels, including retail and wholesale channels, as well as direct delivery to homes. The popular brands of the company include Milgard windows, Behr paint, Hansgrohe and Delta faucets, and Merillat and KraftMaid cabinets.
Strong 4Q14 operating, financial performance
Masco Corporation delivered top line growth of 4% during 2014. Sales increased, and selling, general, and administrative (or SG&A) expenses stayed flat over the previous year. Dividends increased by 20%, and the company repurchased 5 million shares during 4Q14.
The company generated revenues of $2.06 billion during 4Q14, representing a 3% increase year-over-year. Operating profits rose by $202 million, representing a 32% year-over-year increase. Adjusted EPS (earnings per share) grew by 60% to $0.24 for 4Q14. The company also has a strong balance sheet with a total current liquidity of $1.7 billion.
Growth drivers
US housing starts generated a positive surprise during December 2014, despite a minor slip in January 2015, as groundbreaking associated with single-family homes attained a six-year high. This is a hopeful sign for the recovery of the housing market, which has been relatively sluggish. Record-level spending could be posted by the home improvement industry, despite the fact that residential construction is still probably several years away from a complete recovery.
The relatively robust growth in the US economy, prompted by increased consumer spending, industrial production, and household net worth, caused housing metrics to increase during 2014.
Iridian’s key position changes for 4Q14
Iridian initiated new positions in Micron Technology (MU) and Targa Resources (TRGP). The fund exited its position in FMC Corp. (FMC) and Occidental Petroleum Corp. (OXY). Iridian adopted a bullish stance to Masco Corp. (MAS) and a bearish stance with respect to NCR Corporation (NCR) and AutoZone (AZO).
The next part of this series will cover Iridian’s decrease in its holdings in Autozone.
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