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Billionaire Kerr Neilson’s Cheap Stock Picks Include Microsoft Corporation (MSFT)

The fund had 9.3 million shares of Foster Wheeler AG (NASDAQ:FWLT), a $2.2 billion market cap construction company with a focus on energy and power generation facilities, at the end of the fourth quarter. Foster Wheeler trades at 16 times trailing earnings, and Wall Street analysts expect high growth: that price represents only 10 times forward earnings estimates and a five-year PEG ratio of 0.7. SAC Capital Advisors, managed by billionaire Steve Cohen, was buying shares of Foster Wheeler and owned 3.8 million shares (find Cohen’s favorite stocks).

Neilson increased his stake in Baker Hughes Incorporated (NYSE:BHI) by 70% to a total of 2.2 million shares. Baker Hughes- perhaps best known for its drill bits- is an oil and gas equipment and services company with a market capitalization of $19 billion. This places its valuation at trailing and forward P/Es of 15 and 10, respectively. Last quarter, however, earnings were down over 30% from their levels in the fourth quarter of 2011. Baker Hughes was one of the top stock picks in value investor Edgar Wachenheim’s Greenhaven Associates’ portfolio (research more stocks Greenhaven owns).

Another oilfield equipment and services stock Platinum liked was Halliburton Company (NYSE:HAL), with the filing disclosing a position of 1.5 million shares. Halliburton wasn’t as popular among hedge funds as its larger peer Schlumberger Limited. (NYSE:SLB), but it did still mark our list of the most popular energy stocks among hedge funds. At 14 times trailing earnings, Halliburton is considerably cheaper than Schlumberger but the company did report a 26% decline in net income in the fourth quarter of 2012 versus a year earlier despite rising revenue. The sell-side expects the company to recover and we would look closely at both services companies.

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

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