Cliff Asness’s Cheap Stock Picks Include Apple Inc. (AAPL)

Page 1 of 2

There are several ways for retail investors to use the information in quarterly 13F filings from hedge funds for their own gain. For one, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (read more about imitating small cap picks) and we think more strategies are possible as well. Another technique is to look at top picks of different managers- not to imitate them, but to use their ideas similarly to a stock screen as a list of free ideas. We can also combine hedge fund ownership with other criteria such as low price-to-earnings multiples. Read on for our brief thoughts on five stocks that Cliff Asness’s AQR Capital Management owned at the beginning of January with both trailing and forward P/Es of 10 or lower or see the full list of Asness’s stock picks.

The fund’s top pick was Apple Inc. (NASDAQ:AAPL); even with many hedge funds selling the stock, causing Apple Inc. (NASDAQ:AAPL) to lose its place as the most popular stock among hedge funds during Q4 (see which stock was the new #1), AQR actually added a small number of shares and had about 520,000 shares at the end of 2012. Apple Inc. (NASDAQ:AAPL) experienced flat earnings in its most recent quarter compared to the same period in the previous year (with one fewer week in the quarter) and currently trades at 10 times trailing earnings as the market expects a decline in net income.

AQR CAPITAL MANAGEMENTAQR reported owning 4.4 million shares of JPMorgan Chase & Co. (NYSE:JPM) at the end of the fourth quarter of 2012. In terms of the book value of its equity, JPMorgan Chase is essentially fairly valued with a P/B ratio just below 1. The earnings multiples are also low despite the fact that the bank has been reporting large increases in revenue and earnings (and has the London Whale incident to contend with in its trailing numbers). Banks in general look cheap and we’d be interested in comparing JPMorgan Chase to peers such as Wells Fargo.

Asness and his team cut their stake in Chevron Corporation (NYSE:CVX) by 10% but the oil major was still one of their top stock picks. Chevron carries trailing and forward P/Es of 9 and 10, respectively, as large energy companies- like large banks- are generally trading at low earnings multiples. As with JPMorgan Chase, it’s of course possible that some of Chevron’s peers are better buys, even those which are slightly more expensive on an earnings basis. The stock pays a dividend yield of 3%, lower than BP’s but competitive with many similar companies.

See two more of Asness’s picks with low earnings multiples:

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!