Hedge funds and other major investors are required to file 13Fs with the SEC several weeks after the end of each quarter, disclosing many of their long equity positions. Even with the inherent delay there are a number of ways for investors to benefit from this information. For example, we work on using filings to develop investment strategies and have found that the most popular small cap stocks among hedge funds tend to outperform the market by an average of 18 percentage points (read more about our findings on small cap stocks). We also analyze filings from notable investors including hedge fund managers to see what their “recommendations” would be, so that readers can perform additional research on interesting stocks. John Griffin, formerly billionaire Julian Robertson’s right-hand man at Tiger Management, now runs Blue Ridge Capital. Read on for Blue Ridge’s top five picks from the end of December and see the full list of stocks from the 13F.
Griffin’s top pick was Google Inc (NASDAQ:GOOG), with Blue Ridge’s position increasing by 5% to almost 550,000 shares. 126 funds in our database reported a position in Google Inc (NASDAQ:GOOG), which made the company the third most popular stock among hedge funds (find more of hedge funds’ favorite stocks). Google Inc (NASDAQ:GOOG) reported a 7% increase in earnings last quarter compared to the fourth quarter of 2011, and the company has good growth prospects both from its search business and from the continued integration of Motorola Mobility Holdings. It trades at 15 times forward earnings estimates.
Blue Ridge reported ownership of over 10 million shares of American International Group Inc (NYSE:AIG), which had grabbed the #1 spot in our most popular list away from Apple Inc. (NASDAQ:AAPL). AIG’s price-to-book multiple is 0.7, and we think that the stock has at least some upside remaining even though we wouldn’t expect it to trade at book value and it has risen almost 30% in the last year. Billionaire Dan Loeb’s Third Point cut its stake in AIG between October and December but still had over 18 million shares in its portfolio at the beginning of 2013 (research more stocks Third Point owned).
Griffin and a number of other Tiger Cubs liked this travel stock: