Summary
IBM is out of favor with investors.
IBM's performance has started to stabilize and shows seeds of a turnaround.
IBM remains to cheap to be ignored for long.
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Investment Thesis
IBM's (IBM) top line had been contracting for a number of years. And as such, many shareholders have sold out of the stock. Today I argue that while its fundamentals have stabilized, there are reasons to believe that there might be a minuscule amount of growth ahead.
Given the total apathy its shares have experienced lately, IBM trades at a very depressed multiple to what it could trade if it were to prove to investors that it still has some growth left in it.
Background
I have argued in my previous article that IBM has great potential still left in it, but that it has so far shown no ambition to unlock value for its shareholders. Given that Buffett (BRK.B)(BRK.A) has come and gone, it shows that he too has thrown in the towel on this management team. Now, realistically, Buffett's activist days are long over. Presently, Buffett remains more of a passive investor with a lot of pull.
Additionally, we should bear in mind that IBM today is nowhere near as strong as it was back in 2011, when Buffett initiated his position in IBM. However, and here is the crux of my argument, neither is the price that investors are being asked to pay for its shares.
Buffett obviously works very hard on his public persona and would not revisit IBM today. Nevertheless, I do feverishly question whether Buffett would consider investing in IBM today had he not invested in IBM in back in 2011?
