Hedge Fund Valiant Capital’s Favorite Tech Stocks Include Apple Inc. (AAPL)

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.

Apple Inc. (NASDAQ:AAPL)

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:

Valiant slightly increased its holdings of Google Inc (NASDAQ:GOOG) to a total of about 140,000 shares. Billionaire Stephen Mandel’s Lone Pine Capital had sold shares on net between July and September but still closed the third quarter with 1.1 million shares of Google Inc (NASDAQ:GOOG) in its portfolio (check out Mandel’s stock picks). Google Inc (NASDAQ:GOOG) is another stock with an apparently attractive forward P/E- 14 in this case- but we can see the potential for strong earnings growth as Motorola Mobility Holdings is integrated and the search business continues to perform well.

The fund owned about 580,000 shares of Baidu.com, Inc. (NASDAQ:BIDU) at the beginning of 2013. The Chinese search engine reported very strong growth last quarter, with revenue and net income each up by about 40%. While the trailing earnings multiple is 21, growth rates similar to what the company has been experiencing recently would easily leave Baidu undervalued at that price and we’d note that the five-year PEG ratio is 0.6. As with other Chinese companies it’s important to be comfortable with country-specific factors, including macro trends, before investing. Orbis Investment Management recently initiated a large position in Baidu.

Hansen and his team kept their stake in OpenTable Inc (NASDAQ:OPEN) about constant during the quarter at just under 1.1 million shares. 42% of the outstanding shares of OpenTable are held short as traders express doubt that the company can continue its growth, which is somewhat limited by the addressable market of restaurants. The stock trades at 50 times trailing earnings and that’s high enough that we would advise avoiding the stock. Steadfast Capital Management, managed by Robert Pitts, reported owning 1.3 million shares at the end of the third quarter (research more stocks that Steadfast owned).

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