But when I see the big names of the value investing universe buy into Cisco, I can't help but feel relieved that I am in good company.
The June 2011, semi-annual letter from First Eagle Funds (run by Jean-Marie Eveillard) explains their rationale behind buying into Cisco. Here is the excerpt on Cisco.
We had some declines in the portfolio, most notably our holding in Cisco which has a dominant market position in routers and switches, the basic nuts, bolts and software that make the internet tick. In recent months, the market has fretted about cutbacks in government spending budgets (perhaps a sneak preview of things to come more broadly), product cycle issues in their switching business and fears of competitors encroaching on their territory. Our team feels that Cisco is deeply embedded in its customers’ technology platforms and serves as part of an entrenched, interlinked mesh of hardware and software. Cisco also stands to benefit from the growth in video-based traffic over the internet. While we wait for better times ahead, Cisco is exceptionally well capitalized with net cash and has returned substantial capital to shareholders through repurchases and a recently initiated dividend. As such, we have committed some incremental capital to this investment as the valuation margin of safety expanded.
Disclosure: I am an owner of Cisco Systems at the time of this writing.
