6 Stocks Whitney Tilson Extremely Bullish

In his latest investor letter, Whitney Tilson discusses the 12 largest positions in his portfolio. In 2010 T2 Partners’ biggest winners were General Growth Properties (GGP), Berkshire Hathaway (BRK-A), Liberty Acquisition Corp warrants, and British Petroleum (BP). Bill Ackman and Bruce Berkowitz made a bundle on General Growth Properties as well. T. Boone Pickens and Dan Loeb also snatched BP shares during the Gulf of Mexico crisis.

T2 PARTNERS

Whitney Tilson isn’t very optimistic about the stock market in 2011. He thinks the stocks are far from cheap but aren’t extremely expensive either. He is concerned about the rising sovereign debt levels in Europe and Japan. Nevertheless, Tilson is extremely bullish about these 6 stocks:

1. Grupo Prisa (GPOFK.PK): This Spanish media company, which owns the leading newspaper and broadcast-TV channel, is trading at a much lower P/E multiple than comparable media companies. Spain is going through tough times and ad spending for newspaper and TV channels went down by 29% in 2009, according to ZenithOptimedia. The spending is forecast to be flat in 2011, so the situation seems to be getting stable right now.

2. Microsoft (MSFT): Microsoft has $3.85 net cash and its P/E multiple excluding net cash is less than 11. This is a very cheap multiple for Microsoft, which has the dominant position in various product markets. The reason MSFT is trading at such a low multiple is that analysts are pessimistic about Microsoft’s future earnings. They estimate an 8% decline in earnings per share for the fourth quarter of 2010. They think Apple’s rise will shrink the PC market and hurt Microsoft. Tilson expects Microsoft to beat earnings estimates and reach $35 in 2011. Barry Rosenstein’s Jana Partners, David Einhorn’s Greenlight Capital, Craig Effron’s Scoggin Capital, and Brevan Howard are some of other hedge funds bullish about Microsoft.

3. Berkshire Hathaway (BRK-B): Tilson argues that Berkshire’s stock price declined by a cumulative 15% since the beginning of 2008, despite the large increase in its intrinsic value. Tilson is expecting a 33% increase in Berkshire in 2011. In 2010, Tilson anticipated that Berkshire will replace Burlington Northern in the S&P 100 and 500 indices. He estimated that index funds would have to buy $38 Billion worth of Berkshire stock, so he significantly increased his Berkshire positions to front run the index funds. In January Berkshire jumped 15.5% and Tilson was handsomely rewarded at the expense of sheepish index fund investors. Previously, Insider Monkey wrote an article demonstrating that investing in index funds have hidden costs – and this is an excellent example of that. If Whitney Tilson’s calculations are correct, the inclusion of Berkshire to the S&P 500 index cost index fund investors around $6 Billion. This is why index investing isn’t really passive investing and actually underperforms passive investing.

4. British Petroleum (BP): Tilson thinks BP is too cheap, trading at 7.3 times 2011 estimates. In June Tilson started to buy BP at $37 down to its low $27. That was sort of a risky move because of the tail risks of bankruptcy. However, in August after the tail risk of bankruptcy was gone, several investors sold the stock from $43 down to $35. That’s when Tilson bought a lot of BP stock, thinking the stock was more attractive on a risk-adjusted basis. He was right- the stock closed above $44 at the end of 2010.

5. General Growth Properties (GGP): Whitney Tilson imitated Bill Ackman in GGP trade and initially bought the stock at below $1. The problem is he didn’t buy enough to make a significant impact on his returns. The stock is worth around $20 including dividend payments and the Howard Hughes Corp (HHC) spin-off.

6. CIT Group (CIT): This is another stock other hedge fund managers such as Seth Klarman and David Einhorn were heavily invested in.

The next 6 stocks in Tilson’s portfolio are Kraft (KFT), Seagate Technology (STX), Iridium (IRDM), Automatic Data Processing (ADP), Resource America (REXI), and AB InBev (BUD).

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!