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$3 Billion Hedge Fund Valiant Capital’s Stock Picks for 2013

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Christopher Hansen founded Valiant Capital Management in 2008 and the fund currently has about $2.7 billion in assets under management. Valiant recently filed its 13F with the SEC, disclosing many of its long equity positions from the end of December. While we’re particularly excited about using our database of 13F filings to develop investing strategies- for example, in our August newsletter we listed the most popular small cap stocks among hedge funds, a set of stocks which then outperformed the S&P 500 by 18 percentage points between September and January (read more about our hedge fund strategies)– we think that it can also be useful to look at individual funds’ 13Fs to see what stocks they like and what the investment team is thinking about the broader markets. Read on for our quick take on Valiant’s five largest holdings and compare them to previous filings.

Apple Inc. (NASDAQ:AAPL)

Apple Inc. (NASDAQ:AAPL) was the most popular stock among hedge funds in the third quarter of 2012 (see the full top ten list) and Valiant increased its holdings of the technology company during Q4 to a total of about 310,000 shares. Apple Inc. (NASDAQ:AAPL) has now reached the point where its stock price is down from a year ago against a rising market. It now trades at 10 times trailing earnings as the markets worry about the company either losing market share or suffering poorer margins, leading to lower earnings in the long term in either case. We think that that Apple Inc. (NASDAQ:AAPL) is probably undervalued at that price.

We’re not as bullish on Valiant’s second largest holding by market value, Facebook Inc (NASDAQ:FB). The fund had initiated a position of 1.5 million shares in the third quarter, and reported owning 3.8 million shares at the end of December. Facebook Inc (NASDAQ:FB)’s forward P/E- for 2014- is 38, and the company is expected to see high earnings growth between now and then. While Facebook Inc (NASDAQ:FB)’s revenue growth has been strong, costs have also been rising and we’re not confident it has an effective monetization strategy. Tiger Global Management is another major shareholder in Facebook.

Read on for three more stocks Valiant owned:

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