Value Investor Seth Klarman’s Cheap Stock Picks Include BP

Page 1 of 2

By using data from hedge funds’ 13F filings, we have found that on average the most popular small cap stocks among hedge funds beat the market by 18 percentage points per year. Learn more about our small cap strategy. It’s also possible to think of each individual 13F as a list of recommendations from that manager which an investor can refine, doing more research on companies which seem like they have good prospects. Seth Klarman of the Baupost Group is a well-known value investor; copies of his investing book Margin of Safety have sold for up to $1,400. Here are four stocks which Baupost reported owning on its 13F (see the full list of Klarman’s stock picks) and which currently have both trailing and forward price-to-earnings multiples of 18 or lower:

Baupost owned almost 11 million shares of BP plc (NYSE:BP), making it the fund’s largest holding by market value. Oil majors are generally trading at earnings multiples of around 10, and BP is no exception; in fact, its forward P/E is only 8, and we think that is at least in part because its brand remains tarnished by the Deepwater Horizon disaster. We think that BP- which has been very active in selling off assets- has at least some value prospects (and a quite high dividend yield) though with other oil majors being cheap it might be better to look at Exxon Mobil Corporation (NYSE:XOM) and other peers. The Bill and Melinda Gates Foundation Trust is another major shareholder of BP (check out more stocks the trust is invested in).

BAUPOST GROUPOracle Corporation (NASDAQ:ORCL) was another of Klarman’s largest positions; however, he did cut his stake in the enterprise software company by 23%. Oracle also qualifies for value status as its trailing and forward earnings multiples are 16 and 12, respectively. The company’s most recent fiscal quarter ended in November with net income growing 18% from its levels in the same period in the previous fiscal year (though revenue growth was much lower). While we’d prefer to see the company prospering on the top line as well, the combination of growth and earnings multiples in the teens makes it worth further research in our view. Oracle made our list of the most popular tech stocks among hedge funds for the fourth quarter of 2012 (find more tech stocks hedge funds love).

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!