Billionaire Kerr Neilson’s Cheap Stock Picks Include Microsoft

Page 1 of 2

Value investors often start by looking at the price-to-earnings ratio of a stock, using either the trailing earnings or- because a stock grants ownership over future cash flows- analyst expectations for the next year. Sometimes stocks have low multiples because the business is in serious trouble, and earnings will end up declining going forward, but in other cases they can be a guide to value stocks and so we think that it can be useful to review a list of stocks with low multiples and decide if they are worth further research. Here are five stocks which billionaire Kerr Neilson’s Platinum Management (research more stocks Platinum likes) owned at the end of September and which had trailing and forward earnings multiples of 15 or lower:

Kerr Neilson

At almost 11 million shares, Platinum’s top pick in terms of market value on the 13F filing was Microsoft Corporation (NASDAQ:MSFT). Microsoft trades at only 8 times consensus earnings for the fiscal year ending in June 2014; that is an attractive multiple, but quite a bit of the company’s value depends on the success of Windows 8. As a result we think that it’s probably best to wait for more information before deciding if Microsoft truly is a good value or not. Microsoft held the #4 spot in our rankings of the most popular stocks among hedge funds in the third quarter of 2012 (see the full top ten list).

Another tech stock that the fund liked was Cisco Systems, Inc. (NASDAQ:CSCO), with just over 12 million shares in Platinum’s portfolio. Cisco was one of the ten tech stocks that hedge funds were crazy about in the third quarter (find more tech stocks hedge funds liked) and the company does have low earnings multiples: the trailing and forward P/Es are 13 and 10, respectively. Cisco also boasted 18% higher net income in its most recent fiscal quarter (ending in October 2012) compared to the same period in the previous fiscal year, and even though revenue growth was lower (at 6%) we think that investors should take a closer look at the company.

Neilson and his team reported a position of 2.6 million shares in Barrick Gold Corporation (NYSE:ABX). The gold miner’s stock price is down 29% in the last year as business has suffered; in the third quarter of 2012, sales fell 14% and this led to a 55% drop in earnings. Of course the company is highly exposed to gold prices as well- for better or for worse, depending on an investor’s thesis on gold. Vinik Asset Management, managed by former Magellan Fund head Jeffrey Vinik, was another holder of the stock at the end of the quarter (check out Vinik’s stock picks).

Two energy related stocks completed our list:

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!