Six months after the failed tilt at HP, activist investor Carl Icahn has bought another 1.8 million Xerox shares at an average price of USD$16.31, and sold out of HP.
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| "Bullish activity" detected in Xerox trading, but even bulls need to wear Covid masks! (Getty Image) |
Through his investment vehicle Icahn Capital Management, the Wall Street maven has this month upped his stake in Xerox by 7.7%, taking it to a total of 11.86%, easily the largest shareholder at 25.26 million shares held. To put the size of Icahn’s investment business into perspective; the Xerox stake represents only 2.29% of his total assets under management. By August 18th, Icahn had exited his HP stake of around 63 million shares, worth around USD$1.1 billion, with an estimated loss of 18.89% on the original investment in 2019.
However, analysts in New York calculate that Mr Icahn’s total Xerox investment has lost around one-third of its value since 2015. Buying more shares at USD$16.31 is a shrewd move as it is very near the lowest trading figure for Xerox stock since hitting a high of USD$39.47 following the aborted Fujifilm take-over offer and the audacious, but Covid-stymied, $35 billion thrust to buy HP.
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| Carl Icahn still believes in Xerox |
Most analysts agree that Xerox stock is undervalued and Icahn’s buy pushed the price up to USD$18.21 at close of trading yesterday. After-hours trades were pushing it even higher. Nevertheless, Xerox remains third in a list of 20 ‘worst performing stocks during Covid-19’ according to Marketwatch – with a 2020 drop in value of -54.5%.
It’s all making the blocked 2018 Fujifilm $6.1 billion offer look like an opportunity lost. Although a complex deal, it valued Xerox at around USD$32 per share and also served to offload what many Wall Street analysts perceived as a ‘dinosaur’ company, to a well-funded Japanese multinational with a track record of sticking with legacy, unfashionable technologies (silver halide photo-chemistry eg), investing in them and making them profitable. Some call it the ‘last man standing’ strategy; profits can increase in declining markets.
As Covid-19 eases, Xerox’ performance will no doubt improve – it will be an interesting ride to see what happens next.
