Steven Cohen (Trades, Portfolio), portfolio manager of Point72 Asset Management, disclosed on Tuesday he once again increased his position in 8x8 Inc. (EGHT, Financial), having more than doubled his holding during the March quarter.
The billionaire hedge fund manager founded the Stamford, Connecticut-based firm, which invests in discretionary long, short, macro and systematic strategies. As of first quarter-end, the $22.03 billion equity portfolio contains 989 stocks, of which 375 represent new holdings. The firm’s top sectors in terms of portfolio weight are consumer cyclical, technology and health care.
Transaction details
Cohen disclosed a 4,856,518-share stake in 8x8, up approximately 3.58% from his holding as of the March quarter and approximately 176.16% from his holding as of the December 2018 quarter. Shares of the San Jose, California-based telecom company closed at $24.43 on Tuesday and averaged $19.53 during the first quarter.
Company and industry background
8x8 provides enterprise software-as-a-service (SaaS) communication solutions that enable businesses of all sizes to communicate faster and smarter across voice, video meetings, chat and contact centers. The company’s services include 8x8 Virtual Office, 8x8 Contact Center, 8x8 Meetings, 8x8 Team Messaging and Script8.
Risk factors that can impede revenue growth include intense competition from other communication service provides and the subscription-based SaaS platform, which requires the company to maintain a strong customer base. The company competes with other cloud communication and contact center service providers like Zoom Video Communications Inc. (ZM, Financial) and communication software vendors like Cisco Inc. (CSCO, Financial).
Financial strength and profitability analysis
8x8 said on May 14 that revenues for the 12 months ending March 31 were $352.6 million, including $334.4 million in service revenues. Both total revenues and services revenues increased 19% from comparable figures during the 12 months ending March 31, 2018.
GuruFocus ranks 8x8’s financial strength 6 out of 10: Although the company has a strong Altman Z-score of 4.87 and a cash-to-debt ratio that outperforms 98.8% of global competitors, it has a weak Piotroski F-score of 3, suggesting poor business operations. The company’s profitability ranks 6 out of 10 as profit margins that are underperforming over 85% of global telecom services competitors offset the strong three-year revenue growth rate of 19%, a rate that outperforms 90.86% of global competitors.
See also
Cohen’s top five stock holdings as of first quarter-end are Netflix Inc. (NFLX, Financial), The Walt Disney Co. (DIS, Financial), Marvell Technology Group Ltd. (MRVL, Financial), Alphabet Inc. (GOOGL, Financial) and Amazon.com Inc. (AMZN, Financial).
Disclosure: No positions.
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