Apple Inc. (AAPL), Clearwire Corporation (CLWR): We’re Watching This Hedge Fund

Apple Inc. (NASDAQ:AAPL) is one of the smart money’s favorite stocks, and despite its selloff in recent months, it was still one of the most popular investments among the managers we watch heading into 2013. Yes, AIG overtook Apple at the end of last year—in terms of short-term appreciative performance and popularity—but it’s still worth pointing out which hedge fund managers hold Apple Inc. (NASDAQ:AAPL) in their portfolios.

Apple Inc. (NASDAQ:AAPL)

One of the funds on our radar screen is Sirios Capital, managed by John Brennan. Mr. Brennan’s $571 million equity portfolio is primarily split between the technology, services, and financial sectors. His top five stock picks account for nearly 30% of the Sirios 13F-attributable portfolio, and range from banking to blue chips.

Here at Insider Monkey, it’s our job to track 450 of the most elite hedge funds in the world. By concentrating on the best investments and consensus picks of top managers, we’ve developed market-beating strategies. For more than ten years, our small-cap strategy beat the market by over 18 percentage points annually (learn the details).

Let’s have a look at Sirios Capital’s five favorite stocks.

Apple Inc. (NASDAQ:AAPL) is Mr. Brennan’s fifth-favorite stock. Apple comprises 4.59% of the Sirios equity portfolio. As everyone moderately attuned to the world of finance knows, Apple’s stock price has dropped precipitously since last fall, and is down nearly 30% over the past year. However, Apple’s ROI and ROE values are nearly double the industry averages, at 32.96% and 38.41%, respectively—compared to 14.93% and 15.52%. Apple also currently presents a 2.39% dividend yield, and many analysts expect this yield to increase by the end of the current year.

In addition to favorable return ratios, Apple is also one of the cheapest stocks in the tech industry, as well as one of Wall Street’s favorite in this space. At a PEG of 0.5 and trading at a mere 8.6 times forward earnings, the average analyst’s price target on Apple Inc. (NASDAQ:AAPL) indicates expectation of a price of $593.08—an upside of almost 40% from current levels. Needless to say, it’s difficult to find fault with bulls’ reasoning, as this stock is attractive from a value and income standpoint, and there’s still above-average growth in play as well.

In fourth is Whirlpool Corporation (NYSE:WHR), which makes up 5% of Sirios Capital’s equity portfolio. The consumer cyclical stock is up more than 40% over the past six months alone. The company’s ROI and ROE figures both outpace the industry. Whirlpool Corporation (NYSE:WHR)’s ROI is 4.84% compared to an industry average of 3.89%. Likewise, the company’s ROE is 9.50%, which is vastly higher than the industry average of 4.64%. Interestingly, the stock, too, is trading at an above-industry P/E value: 22.97, compared to the industry average of 15.83. Still, from a growth standpoint, shares are actually cheap, as they sport a PEG of 0.8.

Key Corp. (NYSE:KEY) is the third-largest holding in Sirios Capital’s equity portfolio, worth 6.27% of its total holdings. The bank holding company, which presently trades at a P/E of 11.32, is paying a 2.01% dividend, which is comparable to competitors, such as Wells Fargo. The company’s return on equity (8.44%) outpaces the industry average (8.03%), and the stock’s price is up more than 20% over the past year. Key Bank is expected to post an 11.63% EPS growth rate next year.

The second-largest holding in the Sirios Capital equity portfolio is Clearwire Corporation (NASDAQ:CLWR). The wireless broadband service provider comprises 6.64% of John Brennan’s 13F-reported stock holdings, although he has decreased his position substantially, as of late. However, heading into 2013, a total of 32 of the hedge funds we track were long in this stock, a change of 45% from one quarter earlier. The 4G-network operator’s stock is up 39% over the past year and is presently trading with expectations of an EPS growth rate of 62.48% this year.

Comerica Incorporated (NYSE:CMA), Brennan’s favorite stock, comprises a whopping 8% of the Sirios equity portfolio. Recently, Brennan increased his long position in the stock by 2%. The financial services company’s stock is up nearly 12% over the past year. Further, earnings per share growth this year is expected to come close to 30%, with five-year averages falling in the 6-7% range. Add to this, a healthy profit margin (20.46%) and an industry-pacing ROE (7.46% to 8.03%), and it’s not surprising that Brennan is bullish on the stock.

Obviously, the financial services industry is immensely sensitive to economic cycles. Thus, given the present climate, it’s understandable that investors may not be too eager to take a long position in a stock like Comerica. However, it appears to be a strong regional bank, which is appropriately valued, and the valuation argument is one that stretches back to Apple, Clearwire Corporation (NASDAQ:CLWR), Whirlpool, and the remaining members of this hedgie’s top five. If pressed to choose one out of this group, we’d go with Apple Inc. (NASDAQ:AAPL), as the bargain-bin multiples and analyst sentiment are a combination that’s too attractive to ignore.

Disclosure: none

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 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

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!