Here are the most attractively priced stocks in Clifton Robbins’ portfolio. Investors may want to take a closer look at the names below.
Blue Harbour Group’s Most Undervalued Holdings
To determine which stocks are trading below their intrinsic value, aka “fair value” I used the finbox.io Fair Value estimates. I also wanted to blend in some indication of which stocks might be ready to make a move up soon because they’re popular with Wall Street analysts.
I calculated an average using the finbox.io fair value upside and analyst upside to create a blended upside which I then used to rank the most undervalued holdings.
Here are the top stocks based on my calculations:
|Ticker||Name||Upside (finbox.io)||Upside (Analyst Target)||Blend Upside|
|WCC||WESCO INTL INC||45.4%||19.5%||32.5%|
|ON||ON SEMICONDUCTOR CORP||36.2%||18.8%||27.5%|
|MDRX||ALLSCRIPTS HEALTHCARE SOLUTN||23.7%||27.1%||25.4%|
|COMM||COMMSCOPE HLDG CO INC||26.0%||16.5%||21.2%|
|OTEX||OPEN TEXT CORP||8.7%||20.7%||14.7%|
|JACK||JACK IN THE BOX INC||-2.6%||14.5%||5.9%|
Mednax, Inc (NYSE: MD) appears to be the most undervalued stock in the fund. The company has a blended upside of 35.7% relative to its current trading price. Value investors may want to take a deeper dive into the valuation of the company.
WESCO International, Inc. (NYSE: WCC) appears to be the second most undervalued stock in the portfolio. The company’s blended upside of 32.5% is very intriguing. With 27.5% margin of safety, ON Semiconductor Corporation (NASDAQ: ON) is the third most attractively priced security.
Other notable holdings with nice upside potential includes Allscripts Healthcare Solutions, Inc.(NASDAQ: MDRX), CommScope Holding Company, Inc. (NASDAQ: COMM), Open Text Corporation (NASDAQ: OTEX) and Jack In The Box Inc. (NASDAQ: JACK).
Why It’s Worth Monitoring Blue Harbour Group Holdings
Clifton Robbins is a highly respected activist investor and the founder and CEO of Blue Harbour Group. While Blue Harbour is an activist investor, the company stresses that it only works collaboratively with management. In fact, the firm prides itself on the fact that it has never engaged in a proxy war or waged a media campaign against a company.
Before founding Blue Harbour, much of Clifton’s career was in private equity which appears to come through in his approach to investing. He likes to think like an owner, and ask the question: “if we owned the whole company what would we do differently?”
Robbins has a specific niche that he operates in. He looks for companies worth less than $10 billion where he believes the management team is strong but may not be aware of all the ways they can unlock value. He is only interested in working with leaders who are receptive to his ideas. Robbins has also stated he is not interested in fixing broken companies.
His focus therefore is on unlocking value in quality, well managed companies that he thinks are being undervalued by the market. Blue Harbour encourages companies to improve shareholder value by enhancing capital allocation strategies, executing strategic initiatives, and aligning management and shareholder interests. With a solid track record, it is worth taking a deeper look into his current equity holdings.
Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Blue Harbour Group’s holdings above represent positions held as of March 31st and not necessarily reflective of the fund’s current stock holdings.
However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.
The ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed above at the Blue Harbour Group page.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.