Miller Value Partners recently released its Q3 2020 Investor Letter, a copy of which you can download here. During the third quarter, the Deep Value Strategy led the overall marketplace and S&P 1500 Value index, generating returns in excess of 25%. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the said letter, Miller Value Partners highlighted a few stocks and Pitney Bowes Inc (NYSE:PBI) is one of them. Pitney Bowes Inc (NYSE:PBI) is a technology company. Year-to-date, Pitney Bowes Inc (NYSE:PBI) stock gained 36.5% and on November 3rd it had a closing price of $5.50. Here is what Miller Value Partners said:
“Pitney Bowes (PBI), a holding that we added earlier in the year has also been a very positive recent performance contributor. Covid-19 has created a surge in demand for Pitney Bowes’s e-commerce services. During the past two quarters, the company has added nearly 170 new customers. Onboarding these new clients over the coming quarters and the ongoing double-digit industry growth should support e-commerce segment revenue to be greater than $2B over the next couple of years. Over the coming quarters, management is focused on improving the segment’s profitability, lowering transportation, warehouse, and employee costs per piece. Over the next 2-3 years, achieving targets of 8-12% EBIT margins has the potential for the E-commerce business to drive a $250M positive delta in profits, $200M in incremental free cash flow, and contribute more than $1 in incremental EPS. Looking at comparative businesses in the marketplace suggests that the e-commerce segment on a stand-alone basis is worth more than $12 a share. Pitney Bowes also has a Send-Tech Solutions and Presort business that has had more challenging growth trends and is currently recovering from a cyclical trough. These two businesses have a combined opportunity over the next couple of years to generate normalized earnings of ~$1/share and $200M in free cash flow. We believe Pitney Bowes has significant further upside potential as the current share price has a normalized free cash flow and earnings yield over 30%.”
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In June, we published an article revealing Miller Value Partners bullish investment thesis on Pitney Bowes Inc (NYSE:PBI) stock in its Q1 2020 investor letter. This suggests that the investment firm has been bullish for a long time on Pitney Bowes Inc (NYSE:PBI).
In Q1 2020, the number of bullish hedge fund positions on Pitney Bowes Inc (NYSE:PBI) stock decreased by about 35% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in Pitney Bowes’s growth potential. Our calculations showed that Pitney Bowes Inc (NYSE:PBI) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.
