Thesis
Conduent (NASDAQ:CNDT) is undervalued on a book value basis and has been targeted by activist investor Carl Icahn. This article seeks to analyze Conduent's business and balance sheet in order to understand why Carl Icahn aggressively purchased shares and if Conduent is a profitable investment.
The untrained buyer fares best by purchasing goods of the highest reputation, even though he may pay a comparatively high price. But, needless to say, this is not a rule to guide examination and not solely by reputation, and at times he may even sacrifice certain definite degrees of quality if that which he obtains is adequate for his purpose and attractive in price. (Source: Benjamin Graham, Security Analysis, PG 80)
The best investments may not always look pretty. Benjamin Graham found that often the lowest quality stocks were incredibly cheap. He explained many of these poor quality stocks did not correlate well to the price they were selling for, and often opportunity could be found in the trash bin of the market.
Icahn increases holdings in Conduent
Amid the trade tensions and overall shaky economy, most stocks seem to be chugging along paying dividends and dealing with general volatility. However, in the outskirts of the markets, a battle rages where blood and money are being spilled.
The well known corporate raider Carl Icahn is waging war against Conduent. Conduent is a spin-off of the Xerox company in which Carl Icahn is a shareholder. Carl Icahn was upset that Fuji and Xerox were going to merge. Icahn believed that Xerox was being undervalued and launched a proxy fight to make sure the deal didn't go through. Icahn won this proxy fight and the merger never happened. Conduent was later spun off in order to create value for shareholders.
Since the spin-off from Xerox, the war
