Richard Pzena Bullish On Banks & Seagate (STX), Adds Hilton (HLT)

Morgan Stanley (NYSE:MS)

Before moving on to other sectors, let’s take a look at one more position Pzena has in the financial sector: Morgan Stanley (NYSE:MS). As of June 30, the firm owned 12.89 million shares of the bank, or about $335 million in stock. This made it the largest hedge fund investor of the company in our database. Also bullish on Morgan Stanley was Ric Dillon’s Diamond Hill Capital, which disclosed ownership of 12.14 million shares of the company as of June 30.

Morgan Stanley (NYSE:MS) has also had a very volatile year, but has ultimately managed to return more than 5.5%. Moreover, since its late-June lows, it has rebounded by more than 42%. Same as Bank of America, the company delivered strong results last week, with third quarter EPS of $0.81 and revenue of $8.91 billion beating estimates by $0.18 and $740 million, respectively. Following the announcement of those robust figures, Guggenheim upgraded the stock to ‘Buy’, citing the company’s ameliorated asset composition and revenue mix. The firm has a $39 price target on the shares, more than 10% beneath their current price.

Hilton Worldwide Holdings Inc (NYSE:HLT)

Moving outside of the financial world, Pzena disclosed a new position in Hilton Worldwide Holdings Inc (NYSE:HLT), which will split into three separate companies by the end of the year. “The company’s depressed because it’s in lodging and people are fearful that we’re near the end of the upcycle in lodging,” he explained. However, he added, the split could generate about 20% upside in the near-term. On Wednesday morning, the company reported third quarter EPS of $0.23, in-line with the Street’s consensus, on revenue of $2.94 billion, which fell $50 million short of expectations.

Bad news aside, a couple of other funds long Hilton Worldwide Holdings Inc (NYSE:HLT) as of the end of the second quarter were Peter Adam Hochfelder’s Brahman Capital, with 8.46 million shares valued at more than $190 million on June 30, and Anand Desai’s Darsana Capital Partners, with 8 million shares.

Seagate Technology PLC (NASDAQ:STX)

Finally, there’s Seagate Technology PLC (NASDAQ:STX), a company that’s undergoing a restructuring aimed at reducing its overcapacity, created by the transition to the cloud. The company’s most recent quarterly results showed rising gross margins and robust volume on the enterprise front, the latter of which Pzena believes is the stock’s story right now: “It’s a replacement of storage in the cloud rather than in the device,” he said.

As of June 30, Pzena Investment Management held 15.5 million shares of Seagate Technology PLC (NASDAQ:STX), valued at more than $377 million. Also long the stock were Anand Parekh’s Alyeska Investment Group, with 420,395 shares, and Jason Karp’s Tourbillon Capital Partners, with 350,000 shares.

Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned in this article.