Billionaire Andreas Halvorsen’s High Upside Potential Stocks Include Citigroup

Viking Global nearly tripled its stake in Citigroup Inc (NYSE:C) to 5.4 million shares by the end of December. Citi had made our list of the most popular stocks among hedge funds in the fourth quarter of 2012 (find more of hedge funds’ favorite stocks) and certainly by some metrics it is a good value; its price-to-book ratio comes in at 0.7. With Wall Street analysts expecting the bottom line to improve over the next couple years Citi’s forward earnings multiple is 8. We do think that other large banks might be safer investments, however, and in some cases look as if they have a significant upside as well.

The 13F reveals that Halvorsen was also buying SanDisk Corporation (NASDAQ:SNDK), the $13 billion market cap data storage device company, during Q4. Earnings fell 24% in the company’s most recent quarter compared to the same period in the previous year; this was primarily due to weaker margins but sales fell a bit as well. Analysts are expecting SanDisk to experience a strong recovery over the next several years, as shown by the respective trailing and forward P/Es of 32 and 13.

We think that we would be more cautious on SanDisk; recent performance has been bad enough that it we doubt that it is a good investment right now. Citigroup, Humana, and Schlumberger look more appealing but each of those companies features industry peers which are either priced competitively or are actually cheaper in terms of their current business that might make better starting places for value investors. Capital One looks like a good value to us at first glance and we’d recommend that investors take a closer look at the company.

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