13F filings disclose many of a hedge fund’s or other major investor’s long equity positions. One way that we use these disclosures is by pooling them to develop investment strategies; for example, the stocks we named in our August newsletter as the most popular small cap stocks among hedge funds went on to produce an excess return of 18 percentage points between September and January (read more about our hedge fund strategies). Of course, 13F filings can also serve as a guide to what a particular investor’s favorite stocks or favorite industries are. Christopher Hansen’s Valiant Capital recently filed its 13F for the end of December 2012. We picked out the five largest holdings in technology stocks that Valiant reported owning. Read on for our thoughts on these companies and compare them to previous filings.
Valiant’s largest position by market value was its roughly 310,000 shares of Apple Inc. (NASDAQ:AAPL). The stock currently trades at 10 times trailing earnings, as many market players believe that net income will decline going forward as lower margins offset the growing tablet and smartphone business. Apple Inc. (NASDAQ:AAPL) was the most popular stock among hedge funds in the third quarter of 2012 (see the full top ten list). We think that the market has overreacted to Apple Inc. (NASDAQ:AAPL)’s news and so while we are not as bullish as the sell-side (whose earnings estimates imply a forward P/E of 9) we think it is a value play.
Facebook Inc (NASDAQ:FB) was another of Valiant’s favorite tech stocks, with 3.8 million shares in its portfolio. This was up from 1.5 million shares at the beginning of October. Facebook Inc (NASDAQ:FB) trades at 37 times forward earnings estimates, and while the company’s revenue growth has been high we are skeptical that it can actually hit analysts’ earnings targets and then continue strong growth. Tiger Global Management reported a position of almost 12 million shares of Facebook Inc (NASDAQ:FB) in its own 13F for the end of the third quarter of 2012 (find Tiger Global’s favorite stocks).
See three more of Valiant’s tech picks, including Google: