Philippe Jabre’s Top Stock Picks Include Citigroup Inc. (C)

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The fund reported a position of 1.3 million shares in General Electric Company (NYSE:GE) in the filing. GE pays a dividend yield of 3.3% at current prices and dividend levels. However, we would be concerned about the stock’s valuation as it trades at 17 times trailing earnings but its revenue was down slightly in the first quarter of 2013 versus a year earlier. Net income was actually higher, but we’d expect that further improvements on the top line would not be sustainable as long as revenue performance continues to lag.

American International Group Inc (NYSE:AIG) was another of Jabre’s top stock picks. AIG had been the most popular stock among hedge funds in the fourth quarter of 2012, but slipped to the #3 slot earlier this year (check out the full top ten list). It’s another finance and insurance company trading below book value (its P/B is 0.7) even after good returns over the last year. The business has been shrinking as AIG sells off assets, and the sell-side predicts that this will lead to positive results for the company- the forward P/E is only 11.

We wouldn’t fully trust analyst expectations for Citigroup Inc. (NYSE:C) or AIG, but the two stocks are cheap enough that we’d consider them as well as Wells Fargo on value terms. The spread between Dell’s current price and any transaction price is fairly small, so a deal would have to take place quite soon in order to be a competitive investment opportunity without using too much leverage. As for GE, we would avoid it at least for now given the company’s struggles in terms of revenue.

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

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