Apple Inc. (AAPL) Is Billionaire David Shaw’s Top Stock Pick

International Business Machines Corp. (NYSE:IBM) was another of D.E. Shaw’s top stock picks. The IT services and software company experienced a slight decline in revenue in its most recent quarter compared to the fourth quarter of 2011, but net income increased 6%. At trailing and forward P/E multiples of 14 and 11, respectively, there is some value case as long as IBM can continue growing its earnings. The stock is one of Buffett’s top picks, and billionaire Ken Fisher’s Fisher Asset Management owned 3.3 million shares according to its own 13F (research more stocks Fisher owned).

The fund’s ownership of AIG- which we previously mentioned as the new most popular stock among hedge funds- ticked up a bit to almost 12 million shares. We think that AIG has substantial upside from its current discount to the book value of its equity, even though it certainly should not be trading at book from our perspective until it has demonstrated that it is not as risky as it turned out to be during the financial crisis. Third Point, managed by billionaire Dan Loeb, was selling shares of AIG last quarter but still owned over 18 million shares (see other stocks that Loeb likes).

IBM wasn’t the only Buffett favorite that D.E. Shaw liked on its own dime: the 13F disclosed a position of 9.8 million shares in Wells Fargo & Company (NYSE:WFC), though this was down from three months earlier. Wells Fargo trades at a premium to book, though the company has been quite successful in monetizing its assets: in the fourth quarter earnings were up 24% versus a year earlier on decent revenue numbers and improved margins. On an earnings basis the bank does not look pricy at all with a trailing earnings multiple of 10. Lansdowne Partners increased its stake in Wells Fargo by 20% between October and December to a total of 18 million shares.

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