Why One Fund Put 12.6% of Its Portfolio Into Axalta — and What $294M EBITDA Says About the Stock

New York City-based Atlantic Investment Management disclosed a new position in Axalta Coating Systems (NYSE:AXTA) in its November 14 SEC filing, acquiring 764,000 shares valued at approximately $21.9 million.

What Happened

According to a filing with the Securities and Exchange Commission dated November 14, Atlantic Investment Management initiated a new position in Axalta Coating Systems, acquiring 764,000 shares during the third quarter. The stake was valued at $21.9 million at the end of September, representing a significant addition to the fund’s portfolio over the quarter.

What Else to Know

This new position accounts for 12.6% of Atlantic Investment Management, Inc.’s reportable U.S. equity assets as of September 30.

Top holdings after the filing:

• NYSE:GTLS: $29.5 million (17% of AUM)
• NYSE:APTV: $26.3 million (15.1% of AUM)
• NASDAQ:WFRD: $24.7 million (14.2% of AUM)
• NYSE:AXTA: $21.9 million (12.6% of AUM)
• NYSE:OSK: $19.3 million (11.1% of AUM)

As of Thursday, AXTA shares were priced at $29.17, down 28% over the past year and well underpeforming the S&P 500, which is up 12.5% in the same period.

Company Overview

Company Snapshot

• Axalta Coating Systems produces and distributes high-performance coatings, including water- and solvent-borne systems, liquid and powder coatings, and electrocoat products for automotive, industrial, and commercial applications.
• The company generates revenue through the sale of coatings systems and related products, serving both original equipment manufacturers (OEMs) and aftermarket repair shops globally.
• Its main customers include independent body shops, multi-shop operators, OEM dealership body shops, and a broad range of industrial manufacturers across North America, EMEA, Asia Pacific, and Latin America.

Axalta Coating Systems is a global leader in specialty coatings, operating at scale with a diverse product portfolio and a presence in key international markets. The company leverages its technological expertise and established brands to serve both automotive and industrial end markets.

Foolish Take

Axalta’s inclusion as a sizable new holding matters because it gives investors a window into where value-oriented managers see underappreciated operating strength—despite the stock’s sharp volatility this year. The company just posted its 12th straight quarter of year-over-year adjusted EBITDA margin expansion, and record third-quarter EBITDA suggests the business might be performing far better than the share price implies. For a fund that concentrates positions, dedicating more than 12% of its equity book to Axalta signals conviction in that underlying momentum.

In its latest earnings report, Axalta delivered $1.3 billion in revenue and $110 million in net income—all while navigating weaker North American demand. The company also repurchased $100 million in stock during the quarter and plans to deploy up to $250 million more in the fourth quarter, which could boost per-share metrics if execution remains steady.

For long-term investors, the takeaway is that Axalta is showing disciplined cost control, resilient end-market demand overseas, and consistent margin gains. Those fundamentals may offer a more durable foundation than the stock’s recent swings suggest.

Glossary

Assets under management (AUM): The total market value of investments managed by a fund or investment firm.
13F reportable assets: U.S. equity securities that institutional investment managers must disclose quarterly to the SEC via Form 13F.
Position: The amount of a particular security or asset held in a portfolio.
Stake: The ownership interest or share an investor holds in a company.
Original equipment manufacturer (OEM): A company that produces parts or equipment that may be marketed by another manufacturer.
Aftermarket: The market for replacement parts, accessories, and services after the original sale of a product, especially vehicles.
Multi-shop operators: Companies that own and operate multiple auto body repair shops under a single organization.
Electrocoat products: Coating materials applied using an electrical current, often for corrosion protection in manufacturing.
Powder coatings: Dry finishing process using powdered paint, commonly applied to metal surfaces for durability and protection.
Solvent-borne systems: Coating products that use solvents to dissolve resins and facilitate application.
TTM: The 12-month period ending with the most recent quarterly report.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aptiv and Chart Industries. The Motley Fool has a disclosure policy.