In this article, we discuss the 5 cheap value stocks to buy according to Seth Klarman. If you want to read our detailed analysis of Klarman’s hedge fund, go directly to read 10 Cheap Value Stocks To Buy According To Seth Klarman.
5. PG&E Corporation (NYSE:PCG)
Baupost Group’s Stake Value: $311,788,000
Percent of Baupost Group’s 13F Portfolio: 2.52%
Number of Hedge Fund Holders: 64
P/E Ratio: 29.02
PG&E Corporation (NYSE:PCG) is an American utility company that specializes in the generation of electricity and also provides electricity transmission and distribution services to commercial, industrial, and agricultural customers. The company stands fifth on our list of the cheap value stocks to buy according to Seth Klarman.
In Q2 2021, Baupost Group did not make any changes to its stake in PG&E Corporation (NYSE:PCG) and owns over 30.6 million shares in the company, valued at over $311.7 million.
4. Micron Technology, Inc. (NASDAQ:MU)
Baupost Group’s Stake Value: $608,747,000
Percent of Baupost Group’s 13F Portfolio: 4.93%
Number of Hedge Fund Holders: 87
P/E Ratio: 13.13
Micron Technology, Inc. (NASDAQ:MU) is an American company that produces computer memory and computer data storage. In Q2, Baupost Group holds over 7.1 million shares in the company, valued at $608.7 million. Micron Technology, Inc. (NASDAQ:MU) accounts for 4.93% of the hedge fund’s 13F portfolio.
As of Q2 2021, 87 hedge funds tracked by Insider Monkey reported having stakes in Micron Technology, Inc. (NASDAQ:MU), down from 100 in the previous quarter. The total value of these stakes is over $6.3 billion.
Bonsai Partners mentioned Micron Technology, Inc. (NASDAQ:MU) in its Q1 2021 investor letter. Here is what the firm has to say:
“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.
With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.
As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.
While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.
The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”
3. eBay Inc. (NASDAQ:EBAY)
Baupost Group’s Stake Value: $1,045,471,000
Percent of Baupost Group’s 13F Portfolio: 8.48%
Number of Hedge Fund Holders: 39
P/E Ratio: 4.04
As of Q2 2021, Baupost Group owns over 14.8 million shares in eBay Inc. (NASDAQ:EBAY), valued at $1.04 billion. The company accounts for 8.48% of the hedge fund’s 13F portfolio.
This September, Baird lifted its price target on eBay Inc. (NASDAQ:EBAY) to $80, while keeping an ‘Outperform’ rating on the shares.
As of Q2 2021, 39 hedge funds tracked by Insider Monkey have positions in eBay Inc. (NASDAQ:EBAY), compared with 51 in the previous quarter. The total value of these stakes is over $3.12 billion.
Steel City Capital mentioned eBay Inc. (NASDAQ:EBAY) in its Q4 2020 investor letter. Here is what the firm has to say:
“eBay (Long): EBAY continues to be a core holding in the Partnership’s long book despite not having any “sexy” attributes or unknown catalysts. I like EBAY because it checks the boxes of being both capital light and priced as a value stock (low multiple of free cash flow), factors which are attractive in a potentially inflationary environment.
In 3Q’20 the company printed $2.6 billion of revenue vs. guidance of $2.4 billion (a $200 million beat) while full year revenue guidance was taken up by $400 million, implying 4Q’20 would be higher by $200 million as well. Free cash flow from continuing ops was guided to $2.3 billion for the full year, slightly above the $2.0 billion the business regularly generated before getting a Covid/stimulus related boost.
EBAY will have about $4.6 billion of cash on hand at year end5 and should receive another $2.0 billion in after-tax proceeds this quarter related to the sale of its Classifieds portfolio6 . Additionally, the company will receive 540 million shares from Adevinta which are currently valued at ~$8.3 billion, and also holds a warrant to purchase a 5.0% stake in payment processor Adyen which was last valued at ~$775 million. Additional asset sales are also not out of the question7 . Backing everything out at today’s market cap of $38.2 billion gives a clean market cap for the core marketplace of $22.6 billion. At a minimum, I expect $2.0 billion of free cash flow in FY’21, with the potential for a higher figure to the extent the incoming administration is successful in cutting additional stimulus checks. By FY’22, free cash flow should ramp to $2.3 billion after incorporating a full year’s contribution from the managed payments initiative. This values EBAY at 9.6x free cash flow, or 11.7x excluding stock-based comp.”
2. Intel Corporation (NASDAQ:INTC)
Baupost Group’s Stake Value: $1,220,761,000
Percent of Baupost Group’s 13F Portfolio: 9.9%
Number of Hedge Fund Holders: 78
P/E Ratio: 12.09
Intel Corporation (NASDAQ:INTC) is an American multinational technology company that is considered one of the largest chip manufacturers in the world. The company stands second on our list of the cheap value stocks to buy according to Seth Klarman.
This July, Argus lifted its price target on Intel Corporation (NASDAQ:INTC) to $120, while keeping a ‘Buy’ rating on the shares.
As of Q2 2021, 78 hedge funds tracked by Insider Monkey have positions in Intel Corporation (NASDAQ:INTC), compared with 83 in the previous quarter. These stakes are valued at $6.76 billion. Fisher Asset Management is the company’s leading shareholder, with 31.4 million shares.
Alger mentioned Intel Corporation (NASDAQ:INTC) in its first-quarter 2021 investor letter. Here is what the firm has to say:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
1. Liberty Global plc (NASDAQ:LBTYA)
Baupost Group’s Stake Value: $1,459,384,000
Percent of Baupost Group’s 13F Portfolio: 11.84%
Number of Hedge Fund Holders: 30
P/E Ratio: 1.62
Liberty Global plc (NASDAQ:LBTYA) tops our list of the cheap value stocks to buy according to Seth Klarman. It is a multinational telecommunications company that delivers next-generation products through advanced fibers and 5G networks.
As of Q2 2021, Baupost Group holds 53.9 million shares in Liberty Global plc (NASDAQ:LBTYA), worth $1.45 billion.
This September, Jefferies lifted its price target on Liberty Global plc (NASDAQ:LBTYA) to $36.40, while upgrading the stock to ‘Buy’.
As of Q2 2021, 30 hedge funds tracked by Insider Monkey have positions in Liberty Global plc (NASDAQ:LBTYA), compared with 35 in the previous quarter. The total value of these stakes is $806.4 million.
You can also take a look at 10 Best Value Stocks To Buy Now According To Howard Marks and 12 Best Value Dividend Stocks to Buy Now
