Billionaire James Dinan’s High Upside Potential Picks Include AIG

Page 1 of 2

Value investors know that low price-to-earnings multiples are a good place to start looking for good values, but this metric gives no weight to a stock’s growth potential. In order to consider future growth at the cost of less accuracy, we can consider the PEG ratio as well: this metric combines the P/E multiple and analyst expectations of earnings growth rates. As such it’s one way to measure the upside potential- though not necessarily the actual upside- of a stock, with lower values corresponding to lower multiples or higher growth rates. Here are five stocks which billionaire James Dinan’s York Capital Management had at least $70 million invested in at the end of the third quarter of 2012 (some of these picks may no longer be large positions in his portfolio, but we’re looking for suggested stocks to look at rather than to copy Dinan’s portfolio) and which had low PEG ratios.

YORK CAPITAL MANAGEMENT

Dinan’s top pick was American International Group, Inc. (NYSE:AIG) with a position of 8.1 million shares. AIG was one of the most popular stocks among hedge funds in the third quarter (see the full rankings) and the negative sentiment towards the company has helped place it at a very interesting valuation. AIG trades at about half the book value of its equity- we think a more modest discount would be appropriate- and 10 times forward earnings estimates. Analyst estimates imply a PEG of 0.4 and we think that it’s worth considering AIG as a value play.

York reported a position of 13 million shares in Hertz Global Holdings, Inc. (NYSE:HTZ). The $7.3 billion market cap car and equipment rental company is exposed to the broader economy with a beta of 2.7, indicating that its stock price is very responsive to changes in market indices (this is likely more due to the equipment rental business). There’s also considerable short interest in Hertz despite 18% earnings growth in the third quarter of 2012 versus a year earlier and a forward P/E of 10. The PEG ratio is 0.3, though it’s possible that the sell-side is being overly bullish. Jeffrey Tannenbaum’s Fir Tree initiated a position of 5 million shares.

See three more high upside potential stocks:

Page 1 of 2
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

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways 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

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

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!