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Billionaire Louis Bacon’s Long Term Stock Picks Include Citigroup Inc (C)

Insider Monkey tracks quarterly 13F filings from hundreds of hedge funds, including Moore Global, the hedge fund founded and managed by billionaire Louis Bacon. The primary purpose of our database is to help us research investment strategies (for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by 18 percentage points per year) but we can also look back a couple years to see which stocks individual managers have liked over the long term. Blindly imitating these picks is unwise, but they can be a source of free initial investment ideas- similar to a stock screen- with investors then doing further research on any interesting names. Read on for our thoughts on the five largest positions in Moore’s most recent 13F which the fund had owned at least $25 million of at the end of March 2011 or see the full list of Bacon’s stock picks over time.

Moore Global reported a position of 5.2 million shares in Citigroup Inc (NYSE:C) as of the end of the first quarter of 2013. With large banks generally doing well in the second quarter of 2013, Citigroup Inc (NYSE:C) recorded 42% earnings growth versus a year earlier. The stock price has more than doubled from its levels a year ago, yet Citigroup Inc (NYSE:C) still trades at a discount to the book value of its equity with a P/B ratio of 0.8. Wall Street analysts expect continued EPS growth, for a forward P/E of 9. Citigroup Inc (NYSE:C) had been one of the most popular stocks among hedge funds in the first quarter of 2013.


Assured Guaranty Ltd. (NYSE:AGO) was another of Bacon’s long term stock picks; the most recent filing disclosed ownership of 7.2 million shares. Assured Guaranty insures public finance and infrastructure related securities, and because municipalities’ finances are dependent on tax income the stock is somewhat dependent on the overall economy as shown by the beta of 2.0. In quantitative terms the stock is cheap, with trailing and forward P/Es of 10 and 8 respectively, but investors may worry that borrowers have overextended themselves and that more credit events are likely in the future.

The fund has been a long term investor in JPMorgan Chase & Co. (NYSE:JPM), which like Citigroup Inc (NYSE:C) has been producing good financial results going by its recent reports. In book terms JPMorgan Chase carries a premium to Citigroup Inc (NYSE:C), with a market cap slightly above the book value of its own equity, but it has an advantage over many big banks in that its trailing earnings multiple is only 9. At that valuation the company could hold its net income steady over the next several years and still be an attractive value opportunity.

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