Summary
IBM's share price has reached an unreasonable price. IBM is now too cheap to be ignored.
Notwithstanding management's results obfuscations, IBM still presents a suitable opportunity for investors.
IBM is a reminder of how low risk and high uncertainty are very different attributes and how value investors can benefit from high uncertainty.
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Investment Thesis
There is plenty not to like about IBM (IBM). Nevertheless, because it is out of favor with investors, this is precisely why IBM is cheap. As value investors know, the only way to beat the market is by investing against the market. As such, I argue that IBM is now undervalued and presents a valuable investment opportunity.
Recent Developments
In my last IBM article, earlier this month I wrote:
I have been highly critical of IBM's business prospects for some time. And while the issue which troubled me in the past continues to trouble me now, I am turning cautiously optimistic as I believe that at its present valuation, shareholders might have seen the worst of IBM already.
I stand firmly by those statements today. I believe that while IBM has not yet shown much in the way of the fruits of its labor, there are now some rays of light at the end of the tunnel, which leads me to believe that IBM's operations have started to stabilize. Which, when taken together with IBM's low valuation, I suspect that a lot of bad news with regards to its chronic underperformance has already been accounted for.
