Six to seven weeks after the end of each fiscal quarter, hedge funds report many of their long equity positions to the SEC and the general public as of the end of that quarter in 13F filings. Even though the information is delayed, we’ve actually found that the most popular small cap stock picks among hedge funds- as determined from these filings- outperform the S&P 500 by an average of 18 percentage points per year. We also like to look at what fund managers own and then take a brief look at their top stock picks, similarly to the way stock screens are used, and often combine the information found in 13Fs with other screens including price-to-earnings multiples. Read on for our quick take on five stock picks from billionaire Kerr Neilson’s Platinum Asset Management which have both trailing and forward P/Es of 16 or lower, or see the full list of stocks Platinum reported owning.
Microsoft Corporation (NASDAQ:MSFT) slipped out of the top five most popular stocks among hedge funds during the fourth quarter of 2012 (see the new top five), but Neilson and his team actually increased their stake to over 13 million shares. Down 11% in the last year against a rising market, Microsoft Corporation (NASDAQ:MSFT) trades at 15 times trailing earnings thanks in part to a large writedown in 2012. The forward P/E is 9, but that in turn may be skewed due to a temporary boost in earnings as new versions of Microsoft Corporation (NASDAQ:MSFT)’s core products Windows and Office are released.
Platinum also bought shares of Cisco Systems, Inc. (NASDAQ:CSCO) between October and December, and closed 2012 with close to 13 million shares of that stock in its portfolio. The networking and communications technology company has been experiencing slight revenue growth, with the stock trading at only 12 times trailing earnings. The dividend is also close to 3%. Billionaire Ken Fisher’s Fisher Asset Management reported a position of 33 million shares in Cisco on its own 13F (check out Fisher’s stock picks). We think that the combination of value and modest growth is worth considering.
Find more stocks Platinum owns, including two oil and gas equipment and services companies: