Bank of America Corp (BAC), Microsoft Corporation (MSFT): Billionarie Pzena is Long on Tech and Financials

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Pzena’s number one
Pzena’s top bet, per his fund’s 13F filing, is in the tech space. At the end of 1Q, the fund’s top public stock holding was Hewlett-Packard Company (NYSE:HPQ). The fund had 5.7% of its 13F invested in the turnaround tech story. The company’s product portfolio is wide, with printers, PCs, software and services.
In a 2006 interview for Joel Greenblatt’s investing class at Columbia Business School, Pzena noted that

The low-end server market is growing twice as fast as desktops and Microsoft is gaining share. Linux is gaining share. The share losers are Sun, International Business Machines Corp. (NYSE:IBM) and HP.

This was before he became an owner. HP remains an industry leader in the server segment. For me, I think HP has impressive breakup potential, including the sale of its printer business. HP remains one of the largest printer sellers.
The tech company’s latest move includes trying to restructure to save costs. Hewlett-Packard Company (NYSE:HPQ) plans to lay off upwards of 29,000 workers by the end of 2014 in order to save some $3.5 billion. With these cost savings, HP hopes to up its investment in the cloud space.
Specifically, the company has laid out its four areas for growth: (1) increasing sales coverage; (2) digital printing; (3) mobile; (4) and emerging markets. Even still, analysts expect the company to only grow EPS at an annualized 1.6% over the next five years.
Bottom line
Pzena believes that financials and tech are two of the cheapest industries right now. He specifically likes Bank of America Corp (NYSE:BAC) and Microsoft, and I can’t disagree. Bank of America is an under-loved major bank that’s showing strength, while Microsoft Corporation (NASDAQ:MSFT) is looking to turn over a new leaf with forays into new markets and embracing hedge fund ValueACT’s activism — which recently started an activist campaign. Also, HP appears to be in full-blown turnaround mode, but with a number of headwinds still facing the company I’m holding off on investing in HP.

The article Billionarie Pzena is Long on Tech and Financials originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool recommends Bank of America Corp (NYSE:BAC). The Motley Fool owns shares of Bank of America and Microsoft Corporation (NASDAQ:MSFT). Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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