Also in the news…
You’re probably tired of the faux soap opera, “Dell Inc. (NASDAQ:DELL)‘s of our Lives,” but the news streaming out of this leveraged buyout continues to get more interesting by the week. We learned yesterday, according to CNBC, that activist investor Carl Icahn has taken a 100 million share (or 6%) interest in Dell. Known for his hands-on approach to investing.
Speaking of investors taking large positions, a 13G filing with the SEC and brought to light by MarketWatch notes that Citadel Investment Group, which is run by Ken Griffin, owns a 4.6 million share stake, or 5% of outstanding shares, in QLogic Corporation (NASDAQ:QLGC) . I would like to think that Griffin’s fund sees the same value and growth blend that I see in QLogic, including its $5.45 in cash per share with no debt, and clear signs from the fiber-optic sector that telecom service providers are boosting their capital expenditures. QLogic was able to boost its EPS and sales estimates well beyond Wall Street’s last quarter and I’ll be looking for a repeat in the upcoming quarter.
Finally, struggling international mobile service provider France Telecom SA (ADR) (NYSE:FTE) received some analyst love on Monday in the form of an upgrade by Morgan Stanley (NYSE:MS) from underweight to overweight. Morgan Stanley believes that France Telecom’s costs are flattening and that a French price war in mobile is already priced into its shares. With big mobile subsidies on the horizon, Morgan Stanley projected 20% near-term, and perhaps 50% longer-term, upside to France Telecom’s shares. With a yield over 10% and more than $3 billion in free cash flow expected this year, it’s hard to argue with Morgan Stanley’s analysis.
We can do better
Value and contrarian companies continue to fall out of favor as the S&P 500 rockets higher. Even though the portfolio finally turned in a positive week, the S&P 500 rose just a tad more, putting us into a slightly deeper hole at negative 6.6%. Clearly the market can’t head up forever; and when it does finally stop, this portfolio of deeply discounted companies should be set up for a strong outperformance.
The article One Person’s Trash Is Another Person’s Treasure Portfolio originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams owns shares of QLogic, Dell, Skullcandy, and France Telecom, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Dendreon, Staples, Skullcandy, and France Telecom. Motley Fool newsletter services have recommended buying shares of Exelon and France Telecom.
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