Richard Pzena Shares His Thoughts On Seagate And Energy Stocks

Richard Pzena of Pzena Investment Management spoke on CNBC's Fast Money Halftime Report about Seagate Technology PLC STX, which is one of his largest holdings.

He explained that the company is in the middle of correcting the overcapacity that it had due to transition to cloud technology. Cloud storage requires less devices with bigger capacity and this caused a decline in the unit demand, which has put pressure on the prices, so Seagate had to take restructuring actions.

The company has just reported earnings and it showed that its gross margin is in the process of being repaired. There are also strong volumes on the enterprise side.

Pzena also likes Exxon Mobil Corporation XOM and Royal Dutch Shell plc (ADR)(NYSE: RDS-A) in the energy space. He said that the price of these stocks depends on the crude oil price and he thinks that in the long term $50 is unsustainably low price for crude oil. At a current price, non-OPEC production is still declining at a healthy pace and crude oil demand is still rising, added Pzena. He thinks that a sustainable price is somewhere in the $60 to $80 range.