In this article, we discuss 5 stocks that are gaining after announcing share buybacks. If you want to see more stocks in this selection, click These 10 Stocks are Gaining After Announcing Share Buybacks.
5. The ODP Corporation (NASDAQ:ODP)
Number of Hedge Fund Holders: 24
The ODP Corporation (NASDAQ:ODP) is a Florida-based provider of digital workplace technology solutions for small, medium, and enterprise businesses. The ODP Corporation (NASDAQ:ODP) stock climbed 4.73% on July 18 when the company announced Q2 preliminary sales of $2 billion compared to a consensus of $2.04 billion. The company expects FY22 sales to fall between $8.45 billion to $8.60 billion, versus a Street consensus of $8.41 billion. The ODP Corporation (NASDAQ:ODP) also approved a $600 million share repurchase authorization, including a cash tender offer for shares worth up to $300 million.
Among the hedge funds tracked by Insider Monkey, 24 funds were bullish on The ODP Corporation (NASDAQ:ODP) at the end of March 2022, compared to 28 funds in the prior quarter. Parag Vora’s HG Vora Capital Management is the biggest stakeholder of the company, with 5 million shares worth $229.15 million.
Here is what Greenlight Capital has to say about The ODP Corporation (NASDAQ:ODP) in its Q4 2021 investor letter:
“ODP Corporation (ODP) is a holding company that operates retail brands including Office Depot and OfficeMax, and provides business services and products through a B2B distribution platform. ODP is undergoing a corporate transformation that we expect will conclude over the next year, resulting in the separation of its retail and business solutions divisions. ODP has a strong cash position and an undemanding valuation and is in the process of buying back 20% of its shares by the middle of 2022.
As the company is being broken up, we believe that a sum-of-the-parts analysis is appropriate. In June, Staples offered $1 billion in cash for ODP’s retail division, so we will use that. The remaining B2B business has better prospects and we believe that it deserves a higher multiple. We see $200 million of 2022 pro-forma EBITDA for this segment and by assigning a 7x multiple we arrive at $1.4 billion for this piece. Adding in $400 million of net cash and our estimate of $219 million of current value for its recently announced sale of CompuCom Systems (a technology support and services unit), brings us to just over $3 billion of total value. Using the last reported share count, this equates to about $55 per share.
Not included in our valuation is Varis. ODP has assembled a world-class team to create this nascent digital commerce SaaS and procurement business. We believe Varis is promising and offers ODP shareholders a potentially valuable option. We first acquired ODP shares in February and established a medium-sized position throughout the year at an average price per share of $43.69. ODP shares ended the year at $39.28.”
