SAC Capital Advisors may (or may not) be in legal trouble, but billionaire Steve Cohen’s hedge fund is still a major market player whose moves get investors’ attention. We decided to go through SAC’s 13F filing for the third quarter of 2012 and see which of its top holdings passed a basic value screen; perhaps some of these cheap stocks which were in the fund’s portfolio at that time are still good buys today. Read on for our quick take on the five largest positions SAC had in stocks with trailing and forward P/E multiples of 12 or lower, and check out the full list of Cohen's stock picks.
One of SAC’s top stock picks was American International Group, Inc. (NYSE:AIG), with the fund’s position increasing to 8.3 million shares at the end of the quarter, and it wasn’t alone on that point. AIG was such a hot name in the hedge fund community that it was the third most popular stock among hedge funds for the third quarter (see the full rankings) even though it hadn’t made the list at all three months earlier. AIG trades at about half the book value of its equity, and at 10 times analyst consensus for 2013. We think that it makes for a good value stock.
Apple Inc. (NASDAQ:AAPL) is another cheap stock that Cohen and his investment team liked, with SAC owning about 280,000 shares according to the 13F. Apple carries trailing and forward P/Es of 12 and 9, respectively, and a five-year PEG ratio of 0.5. The market seems confident that Apple won’t see any earnings growth over the next several years, while the sell-side is guessing that growth will continue at more or less the same rate. We’d put ourselves roughly in the middle- and so, given where it’s trading, we think it’s a buy. Billionaire Ken Fisher’s Fisher Asset Management added shares during the quarter (find Ken Fisher's favorite stocks), and it had topped our list of hedge funds’ most popular stocks.