Howard Hughes Corp (NYSE:HHC) is another stock Tilson increased his stake in last quarter, upping his position by 600%. The stock is now his 3rd largest 13F holding. Howard Hughes is a real estate investment company that develops various real estate projects from commercial to residential. Howard Hughes completed the spinoff of General Growth Properties in 2010, and has since been one of billionaire Bill Ackman’s favorite picks. Ackman is also the chairman of the Howard Hughes board of directors. Tilson puts the valuation for Howard Hughes as high as $125 per share after visiting the real estate company’s various properties.
Delia’s, Inc. (NASDAQ:DLIA) is a micro-cap stock that operates in the retail segment, and is Tilson’s 4th largest 13F holding. Delia’s most recent earnings showed a net loss per share of $0.06, a large improvement from the loss of $0.14 per share a year ago for the same quarter. The retail company is focused on two primary lifestyle brands that target teenage girls and young women. With a 30x P/E, Delia is above its peers, but we believe this is warranted given the specialty retailer’s above-average expected growth. Delia has a long-term expected EPS growth rate of 14%, above both Cato (10%) and Bebe Stores (0%), two of its closest competitors.
Last but certainly not least, Tilson upped his stake in Apple Inc. (NASDAQ:AAPL) by 1,000% last quarter. The stock rounds out his top five. Apple is expected to see solid revenue growth over the next few years as its products continue to gain market share. Apple continues to generate strong cash flow, ending last quarter with over $120 billion.
Its newest iPhone and iPad should help the tech giant continue to exhibit strong growth through the holiday season. Apple’s chief advantage is its ability to undergo continuous product iteration, which should help drive its industry leading long-term earnings growth rate of 20%.
From a valuation standpoint, Apple still trades well below its tech peers. Apple’s trades at 12x trailing earnings, while Google is at 21.5x and Microsoft is at 14x. The computer hardware industry’s average trailing P/E is also well above that of Apple, at 25x. The Cupertino-based company is also one of the ten tech stocks hedge funds loved at the end of last quarter (check out our entire Top Ten).
In short, Tilson has picked some well-known value plays, including AIG, Apple and Berkshire. All three of these picks are industry giants that are under-appreciated at the moment. Two lesser-known value picks that also present solid growth opportunities are Howard Hughes – a great play on the rebounding real estate market – and Delia’s – a solid opportunity in the apparel industry.
