Stocks In Clifton Robbins Portfolio That Wall Street Loves

in INVESTING IDEAS by

Blue Harbour Group released its quarterly 13F filing with the SEC on May 15th. Applying Wall Street price targets, I highlight the firm’s most undervalued stocks below.


Blue Harbour Group’s 7 Bullish Analyst Targets

Banks and brokerages often release 12 to 18 month price targets for the stocks they cover. Analyst upgrades and downgrades alone can often impact a company’s stock price.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” – Benjamin Graham

The table below ranks stocks in Blue Harbour Group’s portfolio with most bullish analyst targets:

Blue Harbour Group 7 Bullish Analyst Targets
Ticker Name Upside (Analyst Target) % Of Portfolio
MDRX ALLSCRIPTS HEALTHCARE SOLUTN 27.1% 0.1%
OTEX OPEN TEXT CORP 20.7% 11.8%
MD MEDNAX INC 20.0% 8.7%
WCC WESCO INTL INC 19.5% 3.2%
ON ON SEMICONDUCTOR CORP 18.8% 4.7%
COMM COMMSCOPE HLDG CO INC 16.5% 10.7%
JACK JACK IN THE BOX INC 14.5% 2.0%

Allscripts Healthcare Solutions, Inc. (NasdaqGS: MDRX) appears to be the most undervalued stock in the fund based on the average price target from Wall Street analysts.

Open Text Corporation (NASDAQ: OTEX) appears to be the second most undervalued stock in the portfolio. The company’s upside of 20.7% is very intriguing. With 20.0% margin of safety, Mednax, Inc (NYSE: MD) is the third most attractively priced security.

Other notable holdings with nice upside potential includes WESCO International, Inc. (NYSE: WCC), ON Semiconductor Corporation (NASDAQ: ON), CommScope Holding Company, Inc.(NASDAQ: COMM) and Jack In The Box Inc. (NASDAQ: JACK).


Final Thoughts

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.

Expertise: Valuation, financial statement analysis. Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock. His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com. Matt can be reached at matt@finbox.io or at +1 (516) 778-6257.

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