Day 196: Citrix 4 Sale?


The Mother's Little Helper portfolio was UP today +$1,448.56 (+0.20%).

Overall GAIN YTD: +$153,129.81 (+26.23%).

According to CNN Money our benchmark index, the S&P 500 is up +8.42% Year To Date (http://money.cnn.com/data/markets/sandp/).

Is Citrix Systems being prepared for a sale?

One of the best performers in the MLH Portfolio, Citrix Systems (CTXS) is down 3.67% in after hours trading. The after hours sell off occurred when Citrix announced that they had appointed a new CEO, David J. Henshall. Citrix appears to be a tough place to work, especially if you're the CEO because this is the 4th CEO change in two years.

CEO Mark Templeton stepped down in 2015 and was replaced by Robert Calderoni as interim CEO. Kirill Tatarinov took over as CEO in January 2016 amidst a massive restructuring of the company which included the layoff of 1,000 employees. Prior to his appointment at Citrix, Tatarinov was executive VP of Microsoft Business Solutions and came with an impressive record of increasing revenues and profitability, but most important he has transitioned the division to the cloud. Tatarinov has been outspoken about Citrix missing the wave of cloud computing and has been leading a company wide transition to a cloud computing software development structure. Apparently activist investor Paul Singer of Elliott Management thought the 'speed of change' was a bigger problem.

I selected Citrix Systems because I saw potential to unlock hidden value and the new management seemed like the right formula. With an overall return year-to-date in excess of 75%, I'm not complaining or worried. In fact the original thesis is holding up and appears to be getting the boost required to unlock the full potential of the company and the stock price. Henshall has been the companies COO and CFO since 2003. These are two roles that put him in a position to really know everything important about Citrix. Henshall joined Citrix as vice president and CFO in 2003; was appointed senior vice president and CFO in 2006; and appointed as chief operating officer and CFO in 2011. In addition, he served as acting CEO and president of Citrix in 2013 and 2014. Prior to joining Citrix, he served as chief financial officer of Rational Software Corporation, a software company acquired by IBM Corporation in 2003, and also held various finance positions at Cypress Semiconductor and Samsung. With his tenure at Citrix, he brings over 25 years of technology management experience to the role, and has deep knowledge of Citrix’s business. He is also a member of the Board of Directors of LogMeIn and Everbridge.

Hedge funds and Pension Plans buying more shares

The Public Employees Retirement System of Ohio increased their shares of Citrix Systems by 15.6% during the first quarter and now own 97,595 shares of the company’s stock. Other hedge funds also added totheir stakes in the company. Quadrant Capital increased its stake in Citrix Systems by 2.6% in the first quarter. YorkBridge Wealth Partners raised its shares by 75.5% in the first quarter. Fifth Third Bancorp raised its position in shares of Citrix Systems by 10.3% in the first quarter. Greenwood Capital Associates purchased a new position in shares of Citrix during the first quarter valued at approximately $200,000. Finally, ZWJ Investment Counsel purchased a new position in shares of Citrix during the first quarter valued at approximately $225,000. Institutional investors and hedge funds now own 96.75% of the company’s stock.

At the beginning of 2017 Citrix was trading for about $45/share, that was prior to a split. On February 01, 2017 CTXS split shares with a 12,558 for 10,000 split. Prior to the split I set a target price for Citrix of $60/share, after the split I took another look and set a new target of $96. After today's news I've increased my target price to $108/share which is 35% above today's close of $79.93.

I never like to buy shares of a company based on rumors of a take-over or buy-out, but it's nice to own shares of a company that might be bought because the premium paid by the acquirer will be a nice boost to the portfolio.

Stay Invested,

Clay Baker

Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell share withing the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.

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This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice.
This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.

© 2016 by Clay Baker all rights reserved