Hedge Fund Levin Capital Strategies’ Stock Picks for 2013

This week many hedge funds and other major investors are filing their 13Fs for the fourth quarter of 2012, as these filings (which publicly disclose many of a fund’s long U.S. equity positions as of the end of December) are due by February 15^th. 13F filings provide a number of opportunities for investors. We like to use them to help develop investment strategies, including our most popular small cap stocks among hedge funds portfolio. The most popular small cap stocks among hedge funds, which we listed in our August 2012 newsletter, produced an excess return of 18 percentage points between September and January (read more about our hedge fund strategies). We also like to use individual fund filings as a list of suggestions that we can then research so investors are more aware of the company. Here are five of John Levin’s Levin Capital Strategies’s largest holdings as of the beginning of 2013 (see Levin’s stock picks over time):

The fund owned 4.3 million shares of Eaton Corporation, PLC (NYSE:ETN), up from 3.1 million shares three months earlier. Eaton is a provider of electrical components and has a market capitalization of $23 billion. Earnings were down sharply in its most recent quarter compared to the same period in the previous year, though revenue was up. Eaton trades at 17 times trailing earnings, which might be a little high for us to consider it as a value stock. Billionaire Ken Griffin’s Citadel Investment Group was buying Eaton in the third quarter of 2012 (find Griffin’s favorite stocks).

Levin also increased its holdings of large pharmaceutical company Pfizer Inc. (NYSE:PFE). Billionaire Ken Fisher of Fisher Asset Management named Pfizer his top stock pick for 2013 in December of last year (check out more stocks he likes and research Fisher’s previous filings). In the fourth quarter of 2012, the company saw a 10% decline in revenue and an abnormal bump in net income. At a trailing P/E of 14 it might be worth researching the company further. Pfizer also pays a dividend yield of 3.6% and so may be of interest to income investors.

See three more of Levin’s stock picks, including a major bank: