Billionaire Louis Bacon’s Latest Stock Picks

Louis Bacon manages about $15 billion at Moore Capital Management, and his net worth has been estimated at $1.5 billion. According to Moore’s 13F for the third quarter of the year, Bacon and his team moved heavily into financials between July and September- its five largest long stock positions at the end of the quarter were all in financials and had all been initiated in the last three months. Read on for our quick take on Bacon’s favorite stocks and see what other stocks he liked.

MOORE GLOBAL INVESTMENTS

The largest of these positions according to the 13F was Moore’s 5.3 million shares of Citigroup Inc. (NYSE:C). Citi’s stock price is up 40% in the last year, but the climb in the bank’s valuation relative to the book value of its equity hasn’t been as great: the P/B is still at 0.6. There are a number of factors going into this: exposure to Europe, the perception that Citi is “too big” in the sense of having too many disparate businesses, and the fact that that revenue fell 36% last quarter versus a year earlier, pulling earnings down at an even faster rate. The book value and the forward P/E of 8 indicate that it is a good deal anyway, and we’re interested in the stock. 93 hedge funds and other notable investors owned Citi at the end of September, placing it on our list of the most popular stocks among hedge funds.

JPMorgan Chase & Co. (NYSE:JPM) was another of Moore’s top picks as the fund owned 3.8 million shares of that bank. JPMorgan Chase is generally considered to be a more focused and safe bank than Citi, and the stock has rallied nicely from the London Whale losses earlier this year. Earnings have been up strongly, but in terms of valuation we think that it still looks cheap. JPMorgan Chase trades at 9 times trailing earnings and 8 times forward earnings estimates, not to mention a substantial discount to the bank’s book value (the P/B is 0.8). Billionaire Ken Fisher’s Fisher Asset Management more than doubled its stake in JPMorgan Chase during the third quarter (see more stock picks from Fisher Asset Management).

The fund also liked growing hedge fund favorite American International Group, Inc. (NYSE:AIG). The insurer is yet another stock trading at a low P/B ratio (0.5 in this case) and a reasonable forward P/E (9x). Again, we think that we’d recommend AIG as a value play- it probably shouldn’t be trading at book value as we are skeptical that the company is appropriately valuing its assets, but we think that we should see that ratio creeping up in the coming months and likely doing so through an increase in the stock price.

Moore reported owning 3.1 million shares of U.S. Bancorp (NYSE:USB), a large Midwest-focused bank. It’s a bit more expensive in terms of its financials than the other top picks we’ve discussed. It actually trades at 1.8 times the book value of its equity and at 11 times consensus earnings for 2013. The case for buying in at U.S. Bancorp likely depends on its steady growth in earnings per share, as EPS has increased on a q/q basis each of the three quarters of this year. It’s less of a buy than these other companies from our perspective.

The fund’s 2 million shares of Wells Fargo & Company (NYSE:WFC) made that the fifth largest long stock position reported in the filing. Wells Fargo, like U.S. Bancorp, is generally thought of a safer and more stable bank. It too trades at a premium to the book value of its equity, but a lower one at a P/B ratio of 1.2. Its revenue and earnings grew at double-digit rates in the third quarter compared to the same period in 2011, and its forward P/E is only 9. We think that it’s a better value than U.S. Bancorp and is at least competitive with the cheaper finance and insurance stocks as well.

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

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

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

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!