Berkshire Talks Apple, Bill Miller Thinks Valeant Could Double, Plus Hedge Fund Commentary on 3 Other Stocks

Teton Capital Loves Google Because of Cloud, Ads, Pixel Phones

Quincy Lee’s Teton Capital has 13.5% of the value of its portfolio invested in Alphabet Inc (NASDAQ:GOOGL). In its third-quarter investor letter, the Ohio-based fund said Alphabet’s stock is set to hit $2,022 by 2019. The fund thinks Google’s new Expanded Text Ads (ETAs) will increase the click-through rates in Google Ads, eventually boosting the company’s ads business in the coming quarters. Teton is also betting on Google’s Cloud business, which it thinks is showing great signs of growth, mainly in the areas of customer service, enterprise and machine learning. Given the huge overall growth prospects for the cloud industry, the markets will place a high implied multiple on Google’s Cloud business, the letter said. Teton estimates that Google’s Cloud revenue will reach $20 billion by 2019. The hedge fund is also excited about Google’s latest Pixel phones, which will help the company grab a major market chunk from rivals Samsung and Apple.

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St. Jude Medical’s Cybersecurity Problems Are Not Deal Breakers

James Dinan, the founder of York Capital Management, recently talked about Minnesota-based medical device maker, St. Jude Medical, Inc. (NYSE:STJ), on CNBC. Dinan thinks that St. Jude’s’ deal with Abbott Laboratories (NYSE:ABT) will go through, and that the recently reported cyber-security threats to the company’s heart devices will not become a permanent hurdle. Dinan mentioned St. Jude’s announcement of the formation of an advisory board to tackle cyber-security issues affecting patient care and safety. Dinan said cybersecurity threats are plaguing almost every other player in the industry, and he currently likes the “noise” and uncertainty. The FDA started investigating St. Jude Medical’s devices after short seller Muddy Waters and cyber security firm MedSec Holdings claimed St. Jude Medical’s stock would fall, as they had spotted vulnerabilities in the company’s devices. Last week, St. Jude Medical’s Board approved the company’s $31 billion merger with Abbott Laboratories (NYSE:ABT). At the end of the second quarter, 54 funds tracked by Insider Monkey were long St. Jude Medical, Inc. (NYSE:STJ), up from 36 funds a quarter earlier.

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Lasry Thinks Dynegy is Undervalued

Billionaire Marc Lasry, who is the CEO and co-founder of Avenue Capital Group, thinks Dynegy Inc. (NYSE:DYN) is “massively” undervalued because investors are bearish on energy stocks these days and their focus is mainly on cash flows, which are going to contract more in the next three to four years. Lasry finds it “odd” that the cash flows expected to come from Dynegy Inc. (NYSE:DYN) in the coming years will be equal to the market value of the company. The investor thinks Dynegy Inc. (NYSE:DYN) is a great stock to buy except for the debt problem. Lasry’s hedge fund held about 6.73 million shares of Dynegy at the end of the second quarter. Earlier this month, RBC Capital downgraded Dynegy to ‘Sector Perform’ from ‘Outperform’ and slashed its price target to $15 from $22. Michael Platt and William Reeves’ BlueCrest Capital Mgmt owns approximately 28.12 million shares of Dynegy as of the end of June.

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Disclosure: None