XPO Inc

NYSE:XPOUnited States

If the Fed lowers rates, they may be anticipating an economic slowdown. During such downturns, smaller players often become targets for merger activity, and QXO has a $6.5 billion "war chest" to seize opportunities. Even without a housing boom, QXO can squeeze cash flow out of the business because so much of the industry is fragmented and inefficient. QXO is run by Brad Jacobs, the industrial sector's answer to Elon Musk in terms of value creation. How so? Like Musk, he has founded multiple companies, created new businesses, and has a proven record for identifying opportunities others don't see. [People] don't understand how great he is at creating value. He is a magnificent leader and puts shareholders among his top priorities. In the late 1990s, he bought USA Waste Services and sold that to Waste Management. In 1997, he did a similar thing at United Rentals, which became the largest rental company globally. In 2011, he started XPO and rolled up freight transportation companies. He then split XPO into three pieces, with returns over 100%. QXO stock had a wild ride recently, rising sharply, then plummeting. What's going on? It was a rare technical move related to low volume and had nothing to do with fundamentals. We bought the stock in a private placement at $9.14 with $6 a share in net cash on the balance sheet. We see this as a special- situation opportunity. Currently, the company is listed as an applications software company despite its announced plan to move into building-products distribution. It has little analyst coverage. It is in the process of a transformative venture. The net cash cushion, management team expertise, and board help mitigate some of the downside risk. What else is on your list? We own Cheniere Energy, which exports liquefied natural gas and is well positioned to benefit from strong share-buyback programs, efficient capital allocation, and rising global demand for natural gas. Since fiscal 2021, the dividend yield has steadily increased to 1.03%, and we expect $1.5 billion to $2.5 billion in share buybacks in fiscal 2024. CEO Jack Fucso brings a 30-year record of excellence in the energy sector and has a significant personal stake as a shareholder. Since he joined in 2016, the stock has nearly tripled. Thank you. Write to Reshma Kapadia at reshma.kapadia@barrons.com This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. Corrections & Amplifications David Cote is chairman of Vertiv Holdings. An earlier version of this article incorrectly referred to him as CEO. (END) Dow Jones Newswires September 20, 2024 08:05 ET (12:05 GMT)

Ratings actions from Benzinga: https://www.benzinga.com/quote/XPO/analyst-ratings

(END) Dow Jones Newswires

September 19, 2024 11:06 ET (15:06 GMT)