Billionaire Louis Bacon’s Cheap Stock Picks Include JPMorgan Chase

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Discover Financial Services (NYSE:DFS) was another of Bacon’s stock picks; he and his team initiated a position of about 740,000 shares. Discover trades at 9 times both its trailing earnings and analyst consensus for the fiscal year ending in November 2014, and with its most recent quarter showing increases in revenue and earnings versus a year earlier we think it’s well worth considering as a value stock. Billionaire Ken Griffin’s Citadel Investment Group was buying shares of Discover last quarter, increasing its holdings to 5.2 million shares (research more stocks Griffin was buying).

Moore Global was also buying shares of Regions Financial Corporation (NYSE:RF), a regional bank based in the southeastern U.S. Regions carries a significant discount to book value with a price-to-book ratio of 0.8, and its earnings multiples are comparable to the large banks we discussed earlier. In the fourth quarter of 2012, its revenue was up 30% from its levels in Q4 2011. Carlson Capital, managed by Clint Carlson, bought 9.4 million shares of Regions after not having owned any shares at the end of September. We think that the company looks like a good value prospect and would be interested in doing further research.

SunTrust Banks, Inc. (NYSE:STI) rounds out our list of cheap stock picks from Bacon. The stock trades at 10 times forward earnings estimates as recent numbers seem to have been pulled higher by abnormal earnings. SunTrust also has a P/B ratio of 0.8, and analyst expectations are high enough that the stock’s five-year PEG ratio is 0.7. We would note that billionaire George Soros sold 62% of his shares in SunTrust during the fourth quarter, though even at the end of 2012 he still owned 1.5 million shares (see more portfolio activity from George Soros).

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

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