Paul Tudor Jones founded Tudor Investment in 1980 and has a net worth over $3 billion. His fund focuses on short term trading and charges a fee that is above industry standards, charging a 4% management fee and 23% performance fee, compared to the standard 2-and-20 structure. Tudor recently filed its 13F with the SEC, which reveals public equity holdings of the firm as of the end of the third quarter. We have analyzed Tudor's 13F and picked out the fund's five largest holdings. Check out all of the billionaire's top picks, they may just surprise you.
Tudor’s top stock holding at the end of the third quarter was Abercrombie & Fitch Co. (NYSE:ANF), which was a 5000% increase in shares from 2Q. The specialty apparel retailer trades on the high end of the industry with a 35x P/E, compared to American Eagle, Gap and The Buckle all below 20x. We still find value in the stock, though, as it trades at a mere 18 times forward earnings, with a five-year expected EPS CAGR of 18%.
Abercrombie is currently in 'scale-back' mode as it looks to close underperforming stores in the U.S., which should help the company meet its 3% same store sales growth target for next year. Over the longer term, Abercrombie is leaning on its women's branded outlets Gilly Hicks, with plans to open stores through the U.K. and Germany. Abercrombie is one of the small cap stocks that hedge funds love (see our entire list of small caps you may want to buy).
Tiffany & Co. (NYSE:TIF) was a new pick during 3Q that put the stock as the fund's second largest 13F holding. Tiffany trades at 17x earnings, in line wither other top retailer Coach (17x), but below one of its higher profile competitor Blue Nile (70x). Paying a dividend that yields just over 2%, Tiffany appears to be a good value and trades at 15x forward earnings. As economic uncertainty undoubtedly continues, Tiffany's is still expected to perform well, with sales growth expected to be 6% in 2013. A strong rebound abroad will especially help to carry the company in the interim, especially in Japan.
Cardinal Health, Inc. (NYSE:CAH) was also a new position for Tudor during 3Q. This healthcare servicing company trades at only 13x earnings, well below its peers. What's even better is that Cardinal's forward P/E is at 11x. Revenues are expected to be down 7% in 2013 due to the loss of the distribution contract with Express Scripts, but increased generic sales should help offset this given Cardinal is one of the three major drug distribution companies in the U.S. Cardinal was a new pick for the infamous Jim Simons during 3Q (see Jim Simons' top picks here).
C.R. Band, Inc. (NYSE:BCR) saw a 350% increase in shares owned by for Tudor during 3Q, putting CR as Tudor's 4th largest 13F holding. The medical supply company has seen weakness of late thanks to weak demand in U.S. and Europe. Despite a less than desirable macro outlook, many of CR's products have market leading positions and should buoy the company in the interim. Trading in line with the industry at 18x earnings, but with a forward P/E of 14x, we believe that CR's shares could be worth taking a closer look at.
Last but certainly not least, Tudor increased its Allergan, Inc. (NYSE:AGN) stake by over 100% in 3Q, making the healthcare company the fund's fifth largest stock holding. The big-time biopharma player expects to see new growth from its diverse product pipeline despite weak sales in Europe. The sell-side's expected 14% five-year annual EPS growth should be driven by a 'white hot' Botox product. At a 27x trailing P/E, Allergan is on the high end of the industry, but its forward P/E of 20x makes the stock an appealing value play.
We agree that Abercrombie should be Tudor's top pick given its growth prospects and valuation, and are also intrigued by Tiffany given its ability to perform well in a down economy due to its insulated customer base. For Tudor's other three holdings - the healthcare-related companies - Cardinal's market leading position will help the company perform well, but would prefer the high-growth opportunities that CR and Allergan provide.