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Harold Levy’s Iridian Asset Management Is Betting On This Stock

David Cohen and Harold Levy are bullish on Lexmark International Inc (NYSE:LXK) apparently, as their fund, Iridian Asset Management has boosted its stake in the company. As a new filing with the Securities and Exchange Commission showed, Iridian currently holds 6.41 million shares of Lexmark, up from 2.90 million reported in its latest 13F filing. In this way, following the increase, Iridum holds a passive stake that amasses 10.4% of the $2.40 billion company.

Harold Levy Iridian Asset Management

The move falls in line with Iridian’s bullish sentiment that has lasted over the past year. However, the Lexmark International Inc (NYSE:LXK) holding has been rather volatile in the fund’s equity portfolio since it has been initiated in the third quarter of 2012, but overall the fund raised its stake from 1.47 million shares held initially. Overall, the managers of Iridian are special situation investors that are focusing on depressed stocks. The fund holds a diversified equity portfolio worth $9.70 billion, which is focused on services, basic materials, and technology stocks. Iridian has been a long-term shareholder of Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which has been its top largest holding during the last several quarters. The stock has had an impressive run, surging by over 900% over the last five years. Another top pick of Mr. Cohen and Mr. Levy is Sealed Air Corp (NYSE:SEE), which gained more than 140% over the last couple of years.

However, Lexmark International Inc (NYSE:LXK) has posted solid growth over the last couple of years, advancing by some 80% since September 2012.

Lexmark International Inc (NYSE:LXK) is engaged in the distributing printing and imaging businesses, and also serves content and process management markets. As Iridian disclosed surging its position in the company, Lexmark said that it had acquired Toronto-based Claron Technology, a company that provides medical image viewing for around $37 million in cash.

Overall, Lexmark International Inc (NYSE:LXK)’s stock returned some 9% over the last year, while the whole Computer Systems industry, of which it is a part of, returned on average more than 16%. The company has also reported increasing revenues and profits in the last several quarters, which came above the consensus estimate provided by analysts. Moreover, Lexmark’s P/E ratio of 11.70 is more than double versus the industry average P/E of 5.80.

Analysts expect Lexmark International Inc (NYSE:LXK)’s revenues to inch down to $3.6 billion in 2014 and $2014, while its earnings are expected to appreciate slightly to $4.08 and $4.10 respectively. In this way, the stock currently has a cautious ‘Hold’ rating from the majority of analysts, while its average target price stands at $42.50, which is actually bellow the current price of the stock.

On the other hand, the last round of 13F filings showed an increase in interest from investors for Lexmark International Inc (NYSE:LXK). As we track more than 180 investors, we have noticed that 30 reported long positions as of the end of September, with an aggregate value of $395.73. This represents an appreciation from 23 funds with $339.28 million worth of stock in the previous quarter. Iridian, which raised its stake by 15% during the third quarter, was the largest shareholder among funds that we track. It was followed by Jean-Marie Eveillard’s First Eagle Investment Management and Cliff Asness’ AQR Capital Management, which held 1.82 million and 983,100 shares respectively at the end of September.

Disclosure: none

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