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Why Jim Simons Owns CA Technologies

November 05, 2012 | About:

CA Technologies (NASDAQ:CA) has been battered in recent weeks as most big cap tech stocks have reported poor third quarter earnings. The stock is down 16% over the past eight weeks.

Is now a good time to load up on shares?

Jim Simons of Renaissance Technologies, one of the most successful hedge funds over the last decade, has a $67 million investment in CA shares.

The stock recently traded at $22.93 with a trailing price to earnings of 11.6 and a forward P/E of 8.51. CA sports a 4.4% dividend yield.

The stock has a market cap of $10.7 billion and total debt/equity ratio of 0.24. It should be noted that CA is not a stagnant tech company, with an estimated growth rate of 9.33% for the next five years.

The company has huge gross margins of 87% over the last five years and margins have never been below 85% even during the 2009 recession.

The company expects $1.4 billion of free cash flow which should protect the dividend and enable a share buyback.

Investors searching for a safe yield in a volatile equity environment may find CA Technologies appealing as a long-term investment.


Rating: 3.6/5 (7 votes)

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