Nexen, Moody’s, and More: Billionaire Thomas Steyer’s New Stock Picks

Billionaire Thomas Steyer serves as a managing member of Farallon Capital Management, one of the largest hedge funds in the world. Farallon’s fundamental analysis encompasses strategies including pure value, merger arbitrage, and event-driven investments. The fund recently filed its 13F for the third quarter of the year, and by comparing this filing to the one for the second quarter we can see which stocks Steyer and his team added to their portfolio. Read on for our quick take on the five largest new positions that Farallon reported in its 13F portfolio and compare its holdings to those in previous filings.

Thomas-Steyer-e1351513531594

The fund’s largest new holding was takeover target Nexen Inc. (NYSE:NXY), an oil and gas exploration and production company which is notable for its position in Alberta’s Athabasca oil sands. A number of hedge funds have gotten into this stock, because merger arbitrage offers returns that tend to have a low correlation with the broader market- profits and losses depend solely on whether or not the deal closes (read more about merger arbitrage strategies). In this case there’s a real concern that the deal will be struck down by the Canadian government, as the public is wary of seeing Canadian assets sold to Chinese oil company CNOOC. We’re not certain that the deal will be approved, so we’d avoid investing.

Another new stock pick was $3 billion market cap engineering services company The Shaw Group Inc. (NYSE:SHAW), with Farallon owning 2.2 million shares at the end of September. Shaw is up 85% in the last year, and still trades at 16 times earnings on either a trailing or a forward basis. Cliff Asness’s AQR Capital Management moved heavily into the stock during the third quarter as well (see more of Cliff Asness’s stock picks). We think that the company is worth a look, though it doesn’t appear to have been growing its revenues recently and at that pricing we’d like to see at least somewhat better numbers.

Electrical components and protective devices company Cooper Industries plc (NYSE:CBE) was another new long in the portfolio as Steyer and his team bought 1 million shares between July and September. In the third quarter of 2012 Cooper reported that its revenue and net income had risen 8% and 18%, respectively, from their levels in the same period in 2011. The stock is priced for continued growth at 18 times trailing earnings, and our impression is that its industry would be somewhat stable going forward, so we’d need to check to see that it can maintain a double-digit growth rate.

Farallon initiated a position of 1.5 million shares in Check Point Software Technologies Ltd. (NASDAQ:CHKP). Check Point is an IT security company with a market capitalization of $9.4 billion, which places it at P/E multiples in the teens as well. A 17% drop in the stock price in the last year- combined with an earnings increase of 14% between Q3 2011 and last quarter- have placed it at 16 times trailing earnings, with analysts expecting continued growth in 2013. It’s also a stock that might be worth taking a close look at.

It’s a similar story with Moody’s Corporation (NYSE:MCO): it’s a well capitalized stock trading at a trailing P/E of 18, and in its most recent quarter reported 41% earnings growth (off of a 30% rise in revenue) compared to the same period in the previous year. It’s clearly a good stock to buy if it can continue that performance, or even something close to it. Yet here we see fairly high short interest- 9% of the shares outstanding are held short- so there’s clearly disagreement in the market, and as with some of the other companies we’ve discussed here it would be important to review Moody’s in more depth.

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

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

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!