Acquirer’s Multiple Stock HP Inc Appearing In Klarman, Dalio, Greenblatt Portfolios

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Acquirer’s Multiple Stock HP Inc Appearing In Klarman, Dalio, Greenblatt Portfolios
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Part of the weekly research here at The Acquirer’s Multiple features some of the top picks from our Stock Screeners and some top investors who are holding these same picks in their portfolios. Investors such as Warren Buffett, Joel Greenblatt, Carl Icahn, Jim Simons, Prem Watsa, Jeremy Grantham, Seth Klarman, Ray Dalio, and Howard Marks. The top investor data is provided from their latest 13F’s. This week we’ll take a look at:

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HP Inc

HP Inc (NYSE:HPQ) is a leading provider of computers, printers, and printer supplies. The company’s two operating business segments are its personal systems, containing notebooks, desktops, and workstations and its printing segment which contains supplies, consumer hardware, and commercial hardware. In 2015, Hewlett-Packard was separated into HP Inc. and Hewlett Packard Enterprise. The Palo Alto, California based company sells on a global scale with 63% of fiscal 2017 revenue derived from outside the United States.

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A quick look at the price chart below for HP Inc shows us that the stock is up 5% in the past twelve months. We currently have the stock trading on an Acquirer’s Multiple of 7.26, which means that it’s undervalued.

HP Inc

(Source: Morningstar)

Superinvestors who currently hold positions in HP Inc:

Seth Klarman – 18,000,681 shares

Ken Griffin – 3,075,613 shares

Steve Cohen – 2,265,565 shares

Jean-Marie Eveillard – 1,988,702 shares

Cliff Asness – 1,502,131 shares

Joel Greenblatt – 515,824 shares

Lee Ainslie – 402,712 shares

Jeremy Grantham – 281,535 shares

Mario Gabelli – 39,729 shares

Paul Tudor Jones – 20,930 shares

Chris Davis – 20,830 shares

Ray Dalio – 14,973 shares

Roger Ibbotson – 11,121 shares

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The Acquirer’s Multiple® is the valuation ratio used to find attractive takeover candidates. It examines several financial statement items that other multiples like the price-to-earnings ratio do not, including debt, preferred stock, and minority interests; and interest, tax, depreciation, amortization. The Acquirer’s Multiple® is calculated as follows: Enterprise Value / Operating Earnings* It is based on the investment strategy described in the book Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations, written by Tobias Carlisle, founder of acquirersmultiple.com. The Acquirer’s Multiple® differs from The Magic Formula® Earnings Yield because The Acquirer’s Multiple® uses operating earnings in place of EBIT. Operating earnings is constructed from the top of the income statement down, where EBIT is constructed from the bottom up. Calculating operating earnings from the top down standardizes the metric, making a comparison across companies, industries and sectors possible, and, by excluding special items–earnings that a company does not expect to recur in future years–ensures that these earnings are related only to operations. Similarly, The Acquirer’s Multiple® differs from the ordinary enterprise multiple because it uses operating earnings in place of EBITDA, which is also constructed from the bottom up. Tobias Carlisle is also the Chief Investment Officer of Carbon Beach Asset Management LLC. He's best known as the author of the well regarded Deep Value website Greenbackd, the book Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014, Wiley Finance), and Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012, Wiley Finance). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law. Articles written for Seeking Alpha are provided by the team of analysts at acquirersmultiple.com, home of The Acquirer's Multiple Deep Value Stock Screener. All metrics use trailing twelve month or most recent quarter data. * The screener uses the CRSP/Compustat merged database “OIADP” line item defined as “Operating Income After Depreciation.”
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