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
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!