Australian hedge fund Platinum Asset Management is managed by founder- and now billionaire- Kerr Neilson. We went through Platinum’s most recent 13F filing (see Neilson's stock picks) and noticed that 5 of its 12 largest holdings were technology stocks such as Microsoft Corporation (NASDAQ:MSFT) and Google Inc (NASDAQ:GOOG). While this filing is a bit dated, the changes in the fund’s positions over the previous three months had been fairly modest; in fact, all five had been among its twelve largest holdings at the end of June as well. Therefore, it’s likely that Platinum still has large positions in at least most if not all of these stocks and it may be worth it to take a quick look at each company. Here are Platinum’s five largest 13F holdings in the technology sector:
The fund’s top tech pick was Microsoft with a position of close to 11 million shares. Microsoft’s forward P/E is only 8, but consensus earnings estimates are highly dependent on sales of the new versions of Windows and Office. These sales will only provide a temporary bump to Microsoft’s earnings, and it’s possible that sales- particularly of Windows 8- will come in below what the sell-side is projecting (of course, many Windows 8 “customers” will end up buying whether they want the software or not). Microsoft was the fourth most popular stock among hedge funds in the third quarter of 2012 (here is the full top ten list).
Platinum increased its stake in SINA Corp (NASDAQ:SINA) by 13% to a total of 4.1 million shares. Sina operates Chinese Web portals including weibo.com. The stock’s $3.5 billion market cap represents very high earnings multiples; the company does have plenty of cash on its balance sheet but that doesn’t account for the high valuation. John Thaler’s JAT Capital Management was buying the stock in the third quarter as well. We don’t think that Sina is a good stock to buy, and it might even be a short candidate if its net income remains low.
Cisco Systems, Inc. (NASDAQ:CSCO) was another tech stock that Platinum liked. Cisco’s most recent quarterly report, for the fiscal quarter ending in October, had revenue come in 6% higher than a year earlier; improved margins helped bring earnings growth to 18%. Fisher Asset Management, managed by billionaire Ken Fisher, increased the size of its own position by 77% between July and September to a total of nearly 38 million shares (find Fisher's favorite stocks). At 13 times trailing earnings we think that it might be a good value and we’d recommend that investors research the company further.