Sandy Nairn’s Latest Stock Picks Include Google Inc (GOOG)

Edinburgh had 4.5 million shares of SanDisk Corporation (NASDAQ:SNDK), an $11 billion market cap data storage company. SanDisk’s revenue was down 10% in the third quarter of 2012 versus a year earlier, which dragged its net income down 67%. The sell-side expects the company to recover- the trailing and forward P/Es are 24 and 13, respectively- but we think that we would avoid the stock. SAC Capital Advisors, managed by billionaire Steve Cohen, added shares during the third quarter and closed September with 1.8 million shares in its portfolio (find more stocks Cohen was buying).

Nairn and his team had Illinois Tool Works Inc. (NYSE:ITW) as another of their five largest 13F holdings. Illinois Tool Works is a manufacturer of industrial equipment. Its P/E multiples are in the low teens, and in the third quarter of 2012 the company’s financial performance was about flat compared to the third quarter of 2011. Billionaire Ken Griffin’s Citadel Investment Group moved heavily into the stock between July and September (research more stocks Griffin was buying).

As it did with these other stocks, Edinburgh cut its stake in Microsoft Corporation (NASDAQ:MSFT) but the 7.2 million shares the fund owned kept the company in the top five picks. Microsoft has been one of Platinum Asset Management’s favorite stocks; Platinum is managed by billionaire Kerr Neilson. We are being cautious on Microsoft for now, as we are with Google; quite a bit of the company’s value depends on the reception and sales of Windows 8. The forward P/E is low at 8, but that is based on a temporary boost to earnings from sales of the new versions of Windows and Office.

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