Carl Icahn Increases Investment in Xerox
According to GuruFocus, Carl Icahn increased his stake in Xerox by 7.73% on Aug.5.
The guru invested in 1.8 million shares of Xerox, impacting the equity portfolio by 0.16%. The stock traded for an average price of $16.12 on the day of the transaction.
Icahn now holds a total of 25.26 million shares, which represent 2.29% of his total assets managed. GuruFocus estimates Icahn has lost 33.12% on the investment since the fourth quarter of 2015.
In December 2019, the company offered to buy HP Inc. (NYSE:HPQ) for $35 billion. Despite Icahn`s encouragement for shareholders to accept the deal, it fell through in March as a result of the coronavirus pandemic.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued. The GuruFocus valuation rank of 9 out of 10 supports this assessment since its price ratios are near multiyear lows.
Xerox reported its second-quarter results on July 28, posting adjusted earnings of 15 cents per share on $1.47 billion in revenue. While earnings topped analysts` estimates, revenue fell short of expectations as the Covid-19 pandemic took a toll on its core enterprise printer and copier business.
Then, on Aug. 4, the company announced a $550 million offering of 5% senior notes due in 2025 and $550 million in 5.5% senior notes due in 2028. The notes were priced at par. The offering closed on Aug. 6.
GuruFocus rated Xerox`s financial strength 5 out of 10. Although the company has adequate interest coverage, the Altman Z-Score of 1.72 warns it could be in danger of going bankrupt.
The company`s profitability scored a 6 out of 10 ratings on the back of an expanding operating margin, strong returns that outperform a majority of competitors and a moderate Piotroski F-Score of 6, which indicates business conditions are stable. As a result of recording a decline in revenue per share over the past five years, the predictability rank of one out of five stars is on the watch. According to GuruFocus, companies with this rank typically return an average of 1.1% annually over a 10-year period.
With an 11.86% stake, Icahn is Xerox`s largest guru shareholder.
Please leave your comments to the story “Carl Icahn Increases Investment in Xerox” below.