David Tepper, the billionaire founder of hedge fund Appaloosa Management, sent a strongly worded letter to the address. swirl‘s board accused the consumer electronics maker of destroying shareholder value and called for a fundamental change in strategy.
In his letter, Tepper said he watched with “some consternation” as the company engaged in massive and unnecessary shareholder dilution when issuing stock. He argued that despite management’s goal to reduce leverage, the capital raise cost more than 10%, much higher than the company’s tax-adjusted cost of debt in the public market, which was less than 5%.
“Over the years, this management team has destroyed hundreds of millions of dollars in shareholder value. Enough is enough. There are no more excuses,” Tepper said in the letter, which was first obtained by CNBC’s Andrew Ross Sorkin.
Whirlpool, the maker of Maytag and other iconic American appliance brands, was the eighth-largest holding in Appaloosa Management’s portfolio at the end of the fourth quarter, valued at $282 million, according to Verity data.
Whirlpool, 1 year
Whirlpool shares plunged 14% on Tuesday amid a secondary stock sale that raised $454.9 million in a common stock offering and $508.1 million in a deposited stock sale, the company said. Whirlpool also sold 435,000 shares of Guangdong Whirlpool Electrical Appliances in a private placement at a discounted price of $69 per share.
Whirlpool stock fell less than 1% in morning trading after Tepper’s letter was released. The stock has fallen nearly 36% from its 52-week high in July.
A Whirlpool dryer is on display at the Wilson AC & Appliance store on April 26, 2024 in Austin, Texas.
Brandon Bell | Getty Images
The hedge fund manager also criticized Whirlpool for failing to take advantage of tariffs introduced under the Trump administration and said the company should consider possible alliances or mergers with disadvantaged foreign competitors to strengthen its strategic position.
“We encourage boards to (i) remember their fiduciary responsibilities and not accept management that pursues purely self-interest; and (ii) encourage boards to invite domestic and foreign companies that wish to do so.
“Our goal is to create American jobs and increase shareholder value to generate interest in Whirlpool,” the letter said.
Whirlpool did not immediately respond to CNBC’s request for comment.
