Bronx native Mario Gabelli (Trades, Portfolio) is a dedicated long-time contrarian investor who was in attendance at the Berkshire Hathaway (BRK.A, Financial) (BRK.B, Financial) annual shareholders meeting last weekend in Omaha. During the first quarter, Gabelli purchased 479,303 shares of The Valspar Corp. (VAL, Financial).
Valspar is based in Minnesota and is one of the largest global coatings manufacturers in the world, providing coatings and coating intermediates to a wide variety of customers. The company produces paints, varnishes, coatings for rigid packaging, automotive refinish and specialty coatings, as well as primers and varnishes for industrial coils on steel. Valspar was founded in 1806 and currently employs 11,000 employees in over 25 countries and has built the market cap to $8.45 billion.
Gabelli said the following about Valspar in the quarterly commentary.
"The Valspar Corporation is engaged in developing, manufacturing and distributing a range of coatings, paints and related products. The company operates through two business segments: Coatings and Paints. On March 31, 2016 Valspar announced an agreement with competitor Sherwin-Williams to be acquired in a transaction with an estimated value of $8.9 billion. The deal specifies that shareholders of VAL will receive $113 cash per share, and requires a shareholder vote along with regulatory approval. However, should the company need to make divestitures exceeding a specified threshold, then the consideration would be revised down to $105. We expect the deal to close in the early part of 2017."
There are multiple good signs that may have influenced Gabelli to take a stake in Valspar. According to GuruFocus, Valspar has an 8/10 financial strength rating and a 8/10 profitability and growth ranking. The company has increased its revenue per share at an average rate of 7.5% over the previous 10 years, while also increasing gross profit by an average of 7% annually during the same time period. The announcement of the acquisition of Sherwin-Williams also likely influenced Gabelli's decision to purchase shares of the company because it further improves the competitive advantage within the industry, and allows for more opportunity to increase revenues and expand operations in the future.
Below is a Peter Lynch Chart for Valspar.
Cheers to your investment success.
