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Billionaire Bruce Kovner’s Caxton Associates’s Inexpensive Picks Include General Motors Company (GM)

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We track quarterly 13F filings from hundreds of hedge funds, including Caxton Associates (whose founder, Bruce Kovner, became a billionaire due to the fund’s success). We’ve found that even with the inherent delay in 13Fs, these filings can be useful in helping develop investment strategies; for example, we’ve found that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). We can also look through individual funds’ filings for investment ideas in a number of categories, including stocks with low earnings multiples. Read on for our quick take on Caxton’s five largest holdings as of the end of March in stocks with both trailing and forward P/Es of 12 or lower (or see the full list of the fund’s stock picks).

Automakers.

Caxton nearly doubled the size of its position in Ford Motor Company (NYSE:F) to a total of 6.5 million shares, making the automaker one of its largest holdings overall by market value. The stock trades at 11 times trailing earnings, which is about in value territory. Many analysts believe that the U.S. auto market is on the cusp of high demand as consumers replace their cars (which are quite old in historical terms) and sell-side growth forecasts for Ford imply a forward earnings multiple of 9 and a five-year PEG ratio of 0.9.

CAXTON ASSOCIATES LPFord’s peer General Motors Company (NYSE:GM) was another of Caxton’s favorite stocks with the filing disclosing ownership of 3.1 million shares. General Motors Company (NYSE:GM), as it happens, was one of the ten most popular stocks among hedge funds during the first quarter of 2013 (check out the full top ten list). The company experienced a 10% decline in net income in its last quarterly report compared to Q1 2012, however, as poor performance in foreign markets (including Europe) hurt financials overall. We’d still be interested in comparing it to other automakers, but at this point it doesn’t seem too attractive relative to peers.

Three more cheap picks.

The fund initiated a position of 1.3 million shares in Assured Guaranty Ltd. (NYSE:AGO), a $4.2 billion market cap company which primarily insures public finance and infrastructure related securities. The stock is arguably a value play, whether we go by earnings multiples- for example, the trailing P/E is 10- or if we focus on Assured Guaranty’s small discount to the book value of its equity. It should be noted that statistically the stock price tends to be dependent on conditions in the overall market, with a beta of 2.1.

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