4. Lumen Technologies, Inc. (NYSE:LUMN)
Stake Value of Platinum Asset Management: $764,000
Percentage of Platinum Asset Management’s 13F Portfolio: 0.02%
Divided Yield as of April 12: 8.77%
Number of Hedge Fund Holders: 39
Lumen Technologies, Inc (NYSE:LUMN) is an American telecommunications and technology company offering solutions for communications, network services, security, cloud computing, voice, and managed services. On February 9, 2022, Lumen Technologies, Inc (NYSE:LUMN) released its earnings report for the fiscal fourth quarter of 2021. The company reported earnings per share of $0.51 and reported quarterly revenues of $4.85 billion.
This February, Lumen Technologies, Inc. (NYSE:LUMN) declared a quarterly cash dividend of $0.25 per share, which was payable on March 18, 2022, to shareholders of record on March 8, 2022. As of April 12, 2022, the stock has a forward yield of 8.77%.
Lumen Technologies, Inc (NYSE:LUMN) is rising in popularity among elite hedge funds. At the close of Q4 2021, 39 hedge funds were identified as having stakes in the tech company worth $1.07 billion, up from $941.3 million in the preceding quarter with 25 positions.
Longleaf Partners Fund mentioned Lumen Technologies, Inc (NYSE:LUMN) in its fourth-quarter 2021 investor letter. Here is what the firm had to say:
“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.”
