Frank Voisin writes about value investing topics at http://www.frankvoisin.com
Xerox Corporation (NYSE: XRX) is a leading global supplier of document systems, including printers, multifunctions, production publishing systems, managed print services, and software. I have received several emails asking about XRX, pointing to the fact that the company trades below book value, is profitable, and generates significant free cash flows. I thought it would be worth taking a closer look.
The printing business tends to exhibit the attractive characteristic of providing for relatively stable revenues and cash flows. This is due to the fact that many businesses in this industry generate sales from “bundled lease arrangements” in which the customer pays a single monthly price over a lease term for equipment, service, supplies and financing, plus a smaller variable component for page volumes in excess of a contractual minimum. Unlike companies that are reliant on recurring one-time product sales or signing new contracts each year, companies like XRX enjoy the fruits of their labour for many years after the customer is initially signed. This stability makes the valuation job relatively easier (at least, for this portion of the business).
Value investor Mohnish Pabrai has spent a tremendous amount of time studying the investments and investment philosophy of Warren Buffett and Charlie Munger. Q2 hedge fund letters, conference, scoops etc He believes that all investors can learn a great deal from these two billionaires, who are considered to be the greatest investors of all time.