Billionaire Andreas Halvorsen’s High Upside Potential Picks Include QUALCOMM, Inc. (QCOM)

Viking Global initiated a position of 6.7 million shares in Valero Energy Corporation (NYSE:VLO), a $19 billion market cap oil and gas refining and marketing company. The stock is valued at 6 times trailing earnings; at a valuation that low the company can even handle a modest decline in net income and still prove undervalued. With the sell-side actually predicting an improved bottom line here, the PEG ratio comes in below 1. Renaissance Technologies, whose founder Jim Simons is now a billionaire, increased its holdings of Valero between January and March as well (research more stocks Renaissance was buying).

Halvorsen and his team also liked Marathon Petroleum Corp (NYSE:MPC) as a downstream oil and gas company which analysts consider to have high upside potential. Similarly to Valero, the five-year PEG ratio of 0.7 results from earnings multiples in clear value territory (both the trailing and forward P/Es are 7) with a sell-side expectation that business will improve. Sales and net income grew at double-digit rates in its most recent quarterly report compared to the first quarter of 2012. D.E. Shaw, a large hedge fund managed by billionaire David Shaw, owned 3.1 million shares of Marathon Petroleum at the end of Q1.

Citigroup Inc. (NYSE:C) rounds out our list of Viking Global’s high upside potential picks with the filing disclosing ownership of 5.4 million shares. The stock has risen over 70% in the last year, and with analysts expecting earnings to continue to rise as they have done over that period Citigroup trades at 9 times forward earnings estimates. With Citi trading at the discount to the book value of its equity as well, it’s worth considering against other large banks in our view. Billionaire David Tepper’s Appaloosa Management had 8.5 million shares of Citigroup in its portfolio (find Tepper’s favorite stocks).

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