Fisher & Paykel is a New Zealand-based company with a storied history, but for today's investor, the name represents two very different entities. Originally founded in 1934 as an importer of domestic appliances, the company grew into a major manufacturer of refrigerators, washing machines, and other household goods. However, a small internal project in the late 1960s, focused on developing a respiratory humidifier for use in hospitals, blossomed into a world-class medical device business. In 2001, this led to a pivotal corporate split, creating two separate, publicly traded companies: Fisher & Paykel Appliances and Fisher & Paykel Healthcare. This separation is crucial; while many consumers know the appliance brand, the real jewel for investors over the past two decades has been the healthcare company. Understanding this “tale of two companies” is the first step for anyone looking to analyze this corner of the market.
For an investor, confusing the two Fisher & Paykel entities would be like mistaking a dependable workhorse for a thoroughbred racehorse. Both have their merits, but their performance and potential are worlds apart.
This is the company most people recognize. It designs, manufactures, and sells a wide range of premium home appliances. Its products are known for their innovative design, particularly the 'DishDrawer' dishwasher. While a respectable business, its path as a standalone investment took a sharp turn in 2012 when it was acquired by the Chinese multinational giant Haier. As a result, Fisher & Paykel Appliances is no longer an independent, publicly listed company that ordinary investors can buy shares in directly. It now operates as a high-end brand within Haier's global portfolio.
This is the entity that excites the investment world. Fisher & Paykel Healthcare (FPH) is a leading global player in the design and manufacture of medical devices for respiratory care. Its products are critical in two main areas:
FPH has built a formidable competitive advantage, or moat, based on decades of specialized research, a trove of patents, and deep, trusted relationships with hospitals and clinicians worldwide. It's a high-growth, high-margin business driven by powerful long-term trends like aging populations and the increasing prevalence of respiratory diseases.
The Fisher & Paykel story is a fantastic case study in uncovering value. From a value investing standpoint, the 2001 demerger is a textbook example of a value-unlocking event.
When a company separates into two or more independent entities, it's known as a spin-off. As legendary investor Joel Greenblatt highlighted in his book You Can Be a Stock Market Genius, spin-offs are often a fertile hunting ground for value. Before 2001, the brilliant healthcare business was hidden within the larger, slower-growing, and more cyclical appliance company. The market wasn't fully appreciating its potential. The spin-off allowed FPH to step into the spotlight, where its superior economics and growth prospects could be properly valued by investors. The result? FPH's stock has generated extraordinary returns for shareholders since the split.
A true value investor, in the spirit of Warren Buffett, doesn't just look for cheap assets but for wonderful companies at a fair price. FPH fits the “wonderful company” bill perfectly due to its durable competitive advantages: