ClearBridge Investments, an investment management firm, published its “All Cap Value Strategy” fourth quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge All Cap Value Strategy had a positive absolute return for the fourth quarter but underperformed the benchmark Russell 3000 Value Index. On an absolute basis, the Strategy posted gains in 10 of 11 sectors in which it was invested during the quarter. The main contributors to the Strategy’s performance were the materials and health care sectors. The sole detractor to the Strategy’s performance was the communication services sector. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
ClearBridge Investments All Cap Value Strategy, in its Q4 2021 investor letter, mentioned NortonLifeLock Inc. (NASDAQ:NLOK) and discussed its stance on the firm. Founded in 2005, NortonLifeLock Inc. (NASDAQ:NLOK) is a Tempe, Arizona-based software company with a $15.6 billion market capitalization, and is currently spearheaded by its CEO, Vincent Pilette. NortonLifeLock Inc. (NASDAQ:NLOK) delivered a 3.81% return since the beginning of the year, while its 12-month returns are up by 22.87%. The stock closed at $26.97 per share on April 04, 2022.
Here is what ClearBridge Investments All Cap Value Strategy has to say about NortonLifeLock Inc. (NASDAQ:NLOK) in its Q4 2021 investor letter:
“However, not every example has a cyclical dynamic. Consumer cybersecurity company NortonLifeLock undoubtedly benefited from the COVID-19 pandemic lockdowns as sales of personal computers and time spent online skyrocketed, as did subscriptions to the company’s security products. The market has lumped Norton into the “COVID winners” bucket and embedded a substantial reduction in subscriptions going forward as the company laps its strong results from the depths of the pandemic. While these concerns are reasonable for many within the COVID winner cohort, it is not the case for Norton. Company-specific improvements in marketing and product development have been just as powerful tailwinds to subscriber growth and would have continued to carry the company’s growth through the most difficult comparisons from 2020 even without the pandemic effect. The market’s concern about tailwinds turning to headwinds is overwrought, and contrary to the decline currently embedded in the stock price, we are confident that Norton’s earnings will continue to compound. Similar to EQT and OneMain, NortonLifeLock has been actively putting its ample cash flow generation to work to crystalize upside for shareholders. In addition to strong dividends and share repurchase activity, last year Norton announced the acquisition of “freemium” competitor Avast. Already attractive from a pricing standpoint, the acquisition creates the potential to generate immense cost and revenue synergies as well as providing Norton a strong foothold outside the North American market and a broader customer acquisition funnel. Once the transaction closes in 2022, Norton will have growing free cash flow generation of $1.5 billion and a clear path to an EPS of $5, yet a resulting valuation of just 5x earnings power. Given the high-single-digit revenue growth that Avast brings to the table, we believe the continuation of a valuation this depressed for Norton is highly unlikely.”
Our calculations show that NortonLifeLock Inc. (NASDAQ:NLOK) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. NortonLifeLock Inc. (NASDAQ:NLOK) was in 36 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 34 funds in the previous quarter. NortonLifeLock Inc. (NASDAQ:NLOK) delivered a 1.58% return in the past 3 months.
In March 2022, we published an article that includes NortonLifeLock Inc. (NASDAQ:NLOK) in the 10 Value Stocks in Seth Klarman’s Latest Portfolio. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
