Artisan Partners: Apple and Oracle combine value and quality
Artisan Partners Asset Management Inc (APAM - Get Report) typically looks for cash-producing companies with a strong balance sheet and valuations around 8-12X earnings. Even with those classic value-investing criteria, the fund is still putting money into high quality tech companies.
They give the example of Apple Inc. (AAPL - Get Report), who has been selling at a low double-digit multiple by their estimation, and is "growing faster than the market, has a higher dividend yield, has a significantly above-average financial profile and yet trades at a large discount to the market."
The reports argues that Oracle Corporation (ORCL - Get Report), the world's second largest software firm, is in a similar situation, with a high return on equity, strong market position in a field with high barriers to entry, and strong margins. "The company is financially quite strong with around $15 billion in net cash on its balance sheet. Shares sell for about 11X free cash flow before adjusting for its sizable cash position, which is near a historic low valuation."