Billionaire Jeffrey Vinik returned much of Vinik Asset Management’s capital to investors in 2000, but continues to invest money for family and friends. We have already gone through Vinik’s most recent 13F filing to see some of the long equity positions he liked (see Vinik’s stock picks). By considering each of these stocks further, we can pick out those which look like value stocks according to traditional criteria- P/E multiples- and see if these stocks in particular look like good values. Here are five stocks which Vinik reported owning more than $25 million of at the end of September and which have trailing and forward P/E multiples of 13 or lower:
One of Vinik’s top stock picks was Barrick Gold Corporation (NYSE:ABX), with a position of 2.3 million shares. Barrick’s earnings multiples- 11 on a trailing basis, with earnings growth expected this year- make it considerably cheaper than other gold miners such as Goldcorp Inc. (NYSE:GG). However, the company has not been doing well recently: last quarter revenue was down 14% versus a year earlier, contributing to a 55% decline in net income. Fellow billionaire David Einhorn’s Greenlight Capital owned about 2 million shares (find Einhorn’s stock picks). We think Barrick might be a good alternative to investing directly in gold, though it is of course ultimately dependent on gold prices and that might be too speculative for us.
Foot Locker, Inc. (NYSE:FL) was another top pick as Vinik more than tripled his stake in the footwear retailer. Foot Locker does look like it has value potential- it trades at 13 times trailing earnings but sales were up 9% in its most recent fiscal quarter compared to the same period in the previous fiscal year (earnings grew at a much faster rate, though that is likely not sustainable). AQR Capital Management , which is managed by Cliff Asness, increased its holdings of Foot Locker last quarter as well (check out more stocks Asness was buying). We think that it’s worth taking a closer look at the company.
South Korean telecom company KT Corporation (NYSE:KT) has a market capitalization of $4 billion, which together with sell-side estimates imply a forward P/E of only 8. KT’s recent financial performance has been good, and it too may be worth investigating. We’d note that Vinik, who initiated a position of 1.8 million shares last quarter, also has a position in Korea Electric Power Corporation (NYSE:KEP) so he is likely bullish on South Korea as a whole.
Read on to see a cheap oil company that Vinik likes: