We increased the weight in technology, primarily by adding to the existing position in Hewlett-Packard Enterprise (“HPE”) (NYSE:HPE) which became the portfolio’s largest weight by quarter-end. To become a large position, a stock must be attractively valued, have a strong balance sheet, possess a predictable business model, exercise prudent capital allocation, and be liquid. HPE scores well on each of these traits. The company is divesting its software and enterprise services businesses. After adjusting for these transactions the remaining hardware business trades between 5 and 6 times earnings.
From Hotchkis & Wiley's first quarter 2017 Large Cap Fundamental Value shareholder letter.
