Why Hedge Funds are Snapping Up Oracle Stock

Top value-oriented managers are snapping up Oracle (ORCL). Larry Ellison’s company is the top-purchased stock by percentage and dollar value. Among the buyers: David Tepper of Appaloosa Management, besides buying Whirlpool (WHR), bought 763,896 shares, Glenn Greenberg of Brave Warrior Advisors bought 2.1 million shares, and Seth Klaman of Baupost Group bought a whopping 15.8 million shares. It’s now 12.41% of Klaman’s portfolio.

What’s the attraction of Oracle? Cloud computing is putting pressure on its business. Veteran sales exec Keith Block left after some contentious emails came to light in its court case with Hewlett-Packard, one in which he blasted the hardware business as “dead, dead, dead.” And Oracle’s revenue growth has plummeted.

ORCL Revenue Growth Chart

ORCL Revenue Growth data by YCharts

But this gets back to the fact that tech stocks are the new industrials. Oracle doesn’t seem in danger of disappearing. In the meantime, its return on invested capital is on the upswing.

ORCL Return on Invested Capital Chart

ORCL Return on Invested Capital data by YCharts

It has a pile of cash.

ORCL Cash and ST Investments Chart

ORCL Cash and ST Investments data by YCharts

YCharts Pro considers Oracle undervalued.

ORCL PE Ratio Chart

ORCL PE Ratio data by YCharts

Perhaps investors sensed a good opportunity to load up.

ORCL Chart

ORCL data by YCharts

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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