1. Lumen Technologies, Inc. (NYSE:LUMN)
Number of Hedge Fund Holders: 39
Dividend Yield (as of May 7): 8.97%
Lumen Technologies, Inc. (NYSE:LUMN) is an American technology and communications company, offering integrated solutions and services under the Lumen, Quantum Fiber, and CenturyLink brands. As of May 7, the company has a dividend yield of 8.97%.
On February 24, Lumen Technologies, Inc. (NYSE:LUMN) declared a quarterly dividend of $0.25 per share, which was distributed to shareholders of the company on March 18.
Lumen Technologies, Inc. (NYSE:LUMN) posted its Q1 results on May 4, reporting earnings per share of $0.59, which beat market estimates by $0.14. The company also reported a revenue of $4.68 billion for the quarter.
The investor sentiment for the stock has largely been positive, making Lumen Technologies (NYSE:LUMN) a notable income stock. According to Insider Monkey’s fourth quarter database, 39 funds reported owning stakes in Lumen Technologies, Inc. (NYSE:LUMN), up from 25 funds in the previous quarter. Fred Knoll’s Knoll Capital Management reported owning 100,000 shares of the company in Q4, worth $1.25 million.
Here is what Longleaf Partners Global Fund has to say about Lumen Technologies, Inc. (NYSE:LUMN) in its Q4 2021 investor letter:
“In a year that saw various times when the stock market acted like the pre-COVID, during-COVID, and post-COVID “environments” (not necessarily in that order), the good news was that our two largest holdings – which we feel can thrive in all three of these environments – Lumen and EXOR, were among our top contributors for the year. We believe that both remain underappreciated by the market and offer significant upside from today’s discounted prices.
Lumen (40%, 3.06%; 3%, 0.31%), the global fiber company, was the top contributor for the year. CEO Jeff Storey took two actions this year to substantially increase the business’s value and address the stock’s enormous discount (it trades below 35% of our appraisal value). First, during the third quarter, Lumen sold its Latin American fiber for a good price [9x earnings before interest, taxes, and depreciation (EBITDA)] and the weaker half of its US consumer business for an encouraging 5.5x EBITDA. Both multiples came in above our appraisals and demonstrate how cheap the consolidated Lumen RemainCo is today at less than 6x P/FCF and EV/EBITDA. The majority of Lumen’s remaining EBITDA comes from its US Enterprise and Small and Medium Business (SMB) segments, which grow faster than Lumen’s disposed LatAm fiber and are worth higher multiples. The weakest segment of the new Lumen, the western half of Consumer, is superior to the assets the company just sold for 5.5x EBITDA. Second, Storey quickly repurchased 7% of Lumen’s shares, adding meaningfully to value per share and free cash flow per share. When the dispositions close, proceeds will reduce debt meaningfully, putting net debt right at the company’s leverage ratio target even though that target was based on the prior, inferior business mix. We are pleased that our engagement since filing an amended 13D helped the company begin to deliver positive corporate actions. The market has fixated on the potential for another dividend cut, but Lumen’s FCF is more than sufficient to cover the $1/share payout while investing aggressively into high-return, edge-out capex to grow revenues.”
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