Billionaire John Paulson And Insiders Are Bullish On Capital One Financial Corp. (COF) and More

Our database shows two Board members buying Capital One Financial Corp. (NYSE:COF), another of Paulson’s picks, towards the end of April at about $27 per share. Capital One experienced more than a 20% decline in earnings in the first quarter of 2013 versus a year earlier, though going by the trailing and forward earnings multiples the sell-side is expecting the company to rebound: an expected increase in earnings per share results in a forward P/E of 9. Even with the business’s recent troubles, that is a cheap enough price that we think the stock is worth a look. Billionaire Andreas Halvorsen’s Viking Global was one major shareholder in Capital One (find Viking Global’s favorite stocks).

Paulson more than doubled the size of his position in Genworth Financial Inc (NYSE:GNW), which we see a Board member bought 10,000 shares of on May 7th. At a market capitalization of $5.1 billion, the life insurance company trades at 14 times its trailing earnings. However, the stock is much cheaper in terms of consensus earnings for 2014 and net income did more than double last quarter compared to the first quarter of 2012 (though revenue was about flat). In addition, the stock is priced at a discount to the book value of its equity and we’d be interested in learning more about the company. Renaissance Technologies, founded by billionaire Jim Simons, was also buying Genworth (check out Renaissance’s stock picks).

MGIC Investment Corp. (NYSE:MTG) rounds out our list of Paulson’s picks which have also seen insider buying in the last three months. MGIC is another small-cap mortgage insurance company, carrying a valuation of about $2 billion, and like Radian it has been a strong performer over the last year with the stock rising over 150%. Also similarly to Radian, the valuation is somewhat challenging- the stock is pricier here in terms of expected earnings for 2014, with a forward P/E of more than 30- and a number of market players are bearish as 18% of the float is held short.

Disclosure: I own no shares of any stocks mentioned in this article.