In this article, we discuss the 5 value stocks to buy according to billionaire Seth Klarman. If you want to read our detailed analysis of these stocks, go directly to the 10 Value Stocks to Buy According to Billionaire Seth Klarman.
5. eBay Inc. (NASDAQ:EBAY)
Number of Hedge Fund Holders: 49
PE Ratio: 3.67
eBay Inc. (NASDAQ:EBAY) operates in internet and direct marketing retail. The hedge fund of Seth Klarman owned 5.9 million shares of eBay Inc. (NASDAQ:EBAY) at the end of the third quarter of 2021 worth more than $416 million, representing 3.82% of the total portfolio.
UBS analyst Kunal Madhukar recently upgraded eBay Inc. (NASDAQ:EBAY) stock to Buy from Neutral with a price target of $80, noting that the market was “underestimating” the potential the firm had in terms of online advertising.
Among the hedge funds being tracked by Insider Monkey, United Kingdom-based investment firm Ako Capital is a leading shareholder in eBay Inc. (NASDAQ:EBAY) with 7.3 million shares worth more than $512 million.
In its Q4 2020 investor letter, Steel City Capital, an asset management firm, highlighted a few stocks and eBay Inc. (NASDAQ:EBAY) was one of them. Here is what the fund said:
“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.”
4. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 63
PE Ratio: 16.74
Micron Technology (NASDAQ:MU) is a technology company based in Idaho. Baupost Group owned 7.1 million shares in Micron Technology (NASDAQ:MU) at the end of September 2021 worth $508 million, representing 4.67% of the portfolio of the fund.
Micron Technology (NASDAQ:MU) stock has rallied this year amid a broader surge in semiconductor firms as supply chain disruptions and increased product demand in the post-pandemic economy combine to increase chip prices.
At the end of the third quarter of 2021, 63 hedge funds in the database of Insider Monkey held stakes worth $3.8 billion in Micron Technology (NASDAQ:MU), down from 87 in the preceding quarter worth $6.3 billion.
In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ:MU) was one of them. Here is what the fund said:
“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. Qorvo, Inc. (NASDAQ:QRVO)
Number of Hedge Fund Holders: 44
PE Ratio: 16.71
Qorvo, Inc. (NASDAQ:QRVO) markets tech for wireless and wired connectivity. According to the latest data, Baupost Group owned 5 million shares in Qorvo, Inc. (NASDAQ:QRVO) at the end of September 2021 worth $850 million, representing 7.80% of the portfolio.
Qorvo, Inc. (NASDAQ:QRVO) posted earnings for the third quarter in early November, reporting earnings per share of $3.42, beating predictions by $0.17. The revenue over the period was $1.2 billion, smashing expectations by $10 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Qorvo, Inc. (NASDAQ:QRVO) with 1.2 million shares worth more than $203 million.
2. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 66
PE Ratio: 10.03
Intel Corporation (NASDAQ:INTC) makes and sells semiconductors. Baupost Group owned 19.7 million shares in Intel Corporation (NASDAQ:INTC) at the end of September 2021 worth $1 billion, representing 9.66% of the portfolio.
Intel Corporation (NASDAQ:INTC) stock has surged in the past few days after media reports suggested that the company was planning to list the shares of Mobileye, the self-driving car unit of the firm valued at over $50 billion.
At the end of the third quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $6.4 billion in Intel Corporation (NASDAQ:INTC), down from 78 in the previous quarter worth $6.7 billion.
1. Liberty Global plc (NASDAQ:LBTYA)
Number of Hedge Fund Holders: 34
PE Ratio: 1.34
Liberty Global plc (NASDAQ:LBTYA) is a London-based communications firm. Latest securities filings reveal that Baupost Group owned 53 million shares in Liberty Global plc (NASDAQ:LBTYA) at the end of the third quarter of 2021 worth $1.5 billion.
In September, Jefferies analyst Ulrich Rathe upgraded Liberty Global plc (NASDAQ:LBTYA) stock to Buy from Hold and raised the price target to $36.40 from $28.30, backing the firm to double free cash flow over the next three years.
At the end of the third quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $791 million in Liberty Global plc (NASDAQ:LBTYA), up from 30 in the preceding quarter worth $806 million.
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