Activist investor Carl Icahn (Trades, Portfolio) had a busy few weeks trading shares of the printing technology company he loves to hate.
Early this month, the guru dumped over 1.1 million shares of Xerox Corp. (XRX, Financial) for an average price of just under $35. Then, three days later, he sold another 140,000 for an average price of $32 per share. A week later, though, he loaded up on 15.3 million shares for an average price of $29.61.
After all the loading and unloading, Icahn ended up with 38.7 million shares. That compares to the 21 million shares he bought in the last quarter of 2015 when he began buying shares. All told, the guru, so far, has a 9% rate of return on Xerox.
Icahn Capital Management ended the fourth quarter with 17 stocks worth $22 billion, of which almost 50% is in industrials and the remainder is in energy, 20%, financial services, 13.9%, consumer defensive, 6.8%, basic materials, 6.5% and 6.4% in technology and ETFs.
During the quarter, Icahn made only one new buy: Oklahoma-based oil and gas producer SandRidge Energy Inc. (SD, Financial), raising his stake in the company to 13.5%. (He had plenty to say about SandRidge Energy, too, just a few months ago.) Icahn purchased 4.8 million shares for an average price of under $19 a share
Umpteenth round
The war between Icahn and Xerox CEO Jeff Jacobson and its board of directors hit a crescendo this month.
Two days ago, the major shareholder hurled admonishments at Xerox for failing to consider selling to a rival or a private equity firm. The Connecticut-based company could combine with a competitor willing to pay a premium, Icahn fired off in his letter. If Xerox’s “ostrich board of directors would simply take their heads out of the sand,” the company would be doing all right. He issued the statement with Darwin Deason.
Today, Xerox’s board of directors slapped on its website a press release, in a not-so subtle rebuke to Icahn’s criticism. It declared a quarterly cash dividend of 25 cents per share on Xerox common stock. It also announced a quarterly cash dividend of $20 per share on the outstanding Xerox Series B Convertible Preferred Stock.
The company also issued a letter in response to Icahn's, saying he is on a “misguided campaign to undermine Xerox’s combination with Fuji Xerox.” The company says it has studied various options and the combination with Fuji Xerox is “clearly the superior path forward for Xerox.”
Financial health
Thursday afternoon, Xerox shares were trading at just over $30 a share, down 0.43%. In the last three years, Xerox shares have fallen 17%.Ă‚
GuruFocus rates Xerox a 5 out of 10 in financial strength and profitability and growth. The company has several severe warnings signs, based on GuruFocus’ screener. Xerox revenue per share has been declining for the last five years. And its Beneish M-Score implies it might have manipulated its financial results. Inventory is also a potential problem as the company’s buildup may signal difficulty selling its goods.
A signal of health, however, is a Piotroski F-score of 7, which indicates a healthy situation.
Other indicators
The company has a market cap of $7.74 billion and a price-earnings ratio of 51.52 versus an industry median of 26.72 (76% below its peers); a price-book ratio of 1.48 and a price-sales ratio of 0.78.
Its dividend yield is 2.66% and its forward dividend yield is 3.29%. Its three-year dividend growth rate is -6.70%.
Its revenue growth over the last 10 years is -6.60% and -4.90% over the trailing 12 months.
XRX data by GuruFocus.com
