Apple Inc. (NASDAQ:AAPL) is one of the smart money’s favorite stocks, and despite its selloff in recent months, it was still one of the most popular investments among the managers we watch heading into 2013. Yes, AIG overtook Apple at the end of last year—in terms of short-term appreciative performance and popularity—but it’s still worth pointing out which hedge fund managers hold Apple Inc. (NASDAQ:AAPL) in their portfolios.
One of the funds on our radar screen is Sirios Capital, managed by John Brennan. Mr. Brennan’s $571 million equity portfolio is primarily split between the technology, services, and financial sectors. His top five stock picks account for nearly 30% of the Sirios 13F-attributable portfolio, and range from banking to blue chips.
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Let’s have a look at Sirios Capital’s five favorite stocks.
Apple Inc. (NASDAQ:AAPL) is Mr. Brennan’s fifth-favorite stock. Apple comprises 4.59% of the Sirios equity portfolio. As everyone moderately attuned to the world of finance knows, Apple’s stock price has dropped precipitously since last fall, and is down nearly 30% over the past year. However, Apple’s ROI and ROE values are nearly double the industry averages, at 32.96% and 38.41%, respectively—compared to 14.93% and 15.52%. Apple also currently presents a 2.39% dividend yield, and many analysts expect this yield to increase by the end of the current year.
In addition to favorable return ratios, Apple is also one of the cheapest stocks in the tech industry, as well as one of Wall Street’s favorite in this space. At a PEG of 0.5 and trading at a mere 8.6 times forward earnings, the average analyst’s price target on Apple Inc. (NASDAQ:AAPL) indicates expectation of a price of $593.08—an upside of almost 40% from current levels. Needless to say, it’s difficult to find fault with bulls’ reasoning, as this stock is attractive from a value and income standpoint, and there’s still above-average growth in play as well.
In fourth is Whirlpool Corporation (NYSE:WHR), which makes up 5% of Sirios Capital’s equity portfolio. The consumer cyclical stock is up more than 40% over the past six months alone. The company’s ROI and ROE figures both outpace the industry. Whirlpool Corporation (NYSE:WHR)’s ROI is 4.84% compared to an industry average of 3.89%. Likewise, the company’s ROE is 9.50%, which is vastly higher than the industry average of 4.64%. Interestingly, the stock, too, is trading at an above-industry P/E value: 22.97, compared to the industry average of 15.83. Still, from a growth standpoint, shares are actually cheap, as they sport a PEG of 0.8.