Wally Weitz has released his first quarter letter for 2013. In the letter the founder of the value oriented firm discusses some tech stocks. He discusses Dell which now in the spotlight due to a bidding war. He also details his holding of Hewlett-Packard. The stock which Jim Chanos called the ultimate value trap is a favorite holding among many value investors. The PC makers has staged a phenomenal comeback, after being down ~40% in 2012 HPQ is up over 40% this year. Below is an excerpt from Wally Weitz on the stock followed by the full letter in scribd:
Another tarnished technology company, Hewlett-Packard, provided a more positive experience. We first bought HPQ in the low $20’s with the thought that a company with $3-4 per share earning power would trade considerably higher when negative news gave way to “adequate” news. Last fall, as investors chased Apple up to $700 per share on the assumption that iPads would replace PC’s and make printing obsolete, HPQ fell below $12. We believed that Meg Whitman was making progress in stabilizing the company and we bought more at various prices down into the $11’s. Over the past few months, we have enjoyed a strong rebound to $23 (Period ending 3/31/13), and we have taken profits in the majority of our shares. This is not our preferred type of investment—our first choice is the great (growing) business at a reasonable price—but we will occasionally indulge in this type of “deeper value” situation.