John Hussman Buys VMware

Company has shown consistent revenue per share growth over the previous 5 years

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Feb 01, 2017
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John Hussman (Trades, Portfolio), the founder and president of Hussman Strategic Advisors Inc., purchased a 75,000-share position in VMware Inc. (VMW, Financial) during the fourth quarter.

The purchase was made at an average price of $77.63 per share. The trade had a 1.18% impact on Hussman’s portfolio.

VMware has a market cap of $35.6 billion, a price-earnings (P/E) ratio of 31.24, an enterprise value of $29.12 billion and a price-book (P/B) ratio of 4.40.

VMware is one of the largest software infrastructure vendors in the world. The company provides virtualization infrastructure solutions. VMware develops and markets its product and services within three main product groups: SDDC or Software-Defined Data Center, End-User Computing and Hybrid Cloud Computing.

According to GuruFocus, VMware has a 7 out of 10 financial strength rating with a cash-debt ratio of 5.32. It has an equity-asset ratio of 0.49. The Piotroski F-Score of 9 indicates the company’s financial situation is healthy. The Beneish M-score of -2.72 suggests the company is not a manipulator of its financial statements.

VMware Inc has a 9 out of 10 profitability and growth rating with an operating margin of 20.29%, a net margin of 16.72%, a return on equity (ROE) of 14.44%, three-year revenue growth of 11.70% and a return on assets (ROA) of 7.36%.

Hussman may have decided to purchase the shares for the following reasons.

  • The company has an excellent profitability and growth rating according to GuruFocus.
  • The company has a Piotroski- F-score of 9 which is excellent.
  • The company’s revenue per share growth has grown consistently averaging 13.80% per year over the previous five years.
  • The company’s discounted cash flow model is $149.66 which provides Hussman with a $41.74% margin of safety.
  • The company has strong financial statements

Disclosure: Author does not own any shares of this company.

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