Is Ciena Corp. (CIEN) A Smart Long-Term Buy?

Giverny Capital, an asset management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 10.73% was delivered by the fund for the fourth quarter of 2021, slightly below its benchmark, the S&P 500 Index, which delivered an 11.03% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Giverny Capital Asset Management, in its Q4 2021 investor letter, mentioned Ciena Corporation (NASDAQ: CIEN) and discussed its stance on the firm. Ciena Corporation is a Hanover, Maryland-based telecommunications equipment company with a $10.0 billion market capitalization. CIEN delivered a -15.88% return since the beginning of the year, while its 12-month returns are up by 21.28%. The stock closed at $64.75 per share on January 28, 2022.

Here is what Giverny Capital Asset Management has to say about Ciena Corporation in its Q4 2021 investor letter:

“As for purchases, in the fourth quarter we established a new position in Ciena Corp. The logic behind our purchase of Ciena is similar to II-VI. Whereas a large chunk of II-VI’s business is in network communications, Ciena is entirely oriented to the sector. It makes optical equipment that transports voice and data on Internet and telecom networks. Ciena has been a technological leader for a long time, but for many years the industry itself was challenging. First, domestically Ciena relied heavily on two customers: Verizon and AT&T. The customers had negotiating power and drove hard bargains. Second, Ciena competed globally against Huawei, the Chinese state-owned telecom components manufacturer. Huawei might be described as caring more about market share than profit and it was hard for Ciena to make money competing against it.”

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Our calculations show that Ciena Corporation (NASDAQ: CIEN) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CIEN was in 28 hedge fund portfolios at the end of the third quarter of 2021, compared to 29 funds in the previous quarter. Ciena Corporation (NASDAQ: CIEN) delivered a 19.27% return in the past 3 months.

You can find other 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.