Kyle Bass Buys 5.9 Pct of Sealy Corporation

Source: nasdaq.com

Kyle Bass purchased 5,644,245 shares of Sealy Corporation ( ZZ ), or 5.9% of the global bedding producer, at the average price of $2.04 on September 20, according to GuruFocus Real Time Picks . Bass is the managing member and principal of Hayman Advisors LP and primarily invests according to his views on the macroeconomic environment.

Sealy's stock has declined almost 88% in the last ten years, but gained almost 35% in the last month. The company's revenue declined annually from 2007 to 2010, and increased to $1.2 billion in 2011. Earnings had been increasing each year since Sealy fell to a loss in 2008, but it fell to another loss, of $5.66 million, in 2011. Sealy's balance sheet contains approximately $232.2 in cash and $810.1 million in long-term liabilities and debt.

The company's stock has traded in a range of $1.09 and $2.45 per share in the last 52 weeks, though it began trading at $17.50 when it held its IPO in 2006.

Sealy has been making operational changes in the last several years. Most prominently, in the first and second quarters, it introduced and began to ship two new lines - one premium and one value priced - and accompanied them with an advertising campaign. In the first quarter, sales, gross margin and adjusted EBITDA performance improvement were driven by the success of its Next Generation Stearns & Foster line, which it began shipping in the fourth quarter of 2011.

In the fourth quarter of 2010, Sealy divested all of its European assets and discontinued operations in Brazil and arranged license agreements with third parties in those markets instead.

In an investor presentation, Sealy says that its outlook is "strongly tied to macroeconomic conditions" and shows that the whole industry had double-digit sales growth in the years following stagnant recessionary periods as U.S. GDP improved.

The company announces its third-quarter financials, which will contain the results of its new initiatives, on September 27.

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