This article by MOI Global instructor Shreekkanth Viswanathan is excerpted from a letter of SVN Capital, based near Chicago, Illinois.
In Q1 2019 I started building a position in AOS, a 144-year old company that manufactures and sells water heating and treating appliances in North America, China, and increasingly in India and other emerging markets. The company makes Water Heaters (2.5 gallons to 4,000 gallons), Boilers (40,000 BTUs to 6.0 mill BTUs), and Water Treatment products. About 2/3rd of its sales are in North America and about 1/3rd is in China. That’s one of the reasons why I started digging into the details. As the tariff tiff between the US and China started worsening in 2018, AOS (and other China exposed businesses) started feeling the heat and correspondingly their stock prices started tumbling – AOS went from high-$60s in early 2018 to low-$40s. It worsened into Q4 2018, with the rest of the market. But why do I like this business now? How does it fit my selection criteria?
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