Billionaire Louis Bacon’s Cheap Stock Picks Include JPMorgan Chase & Co. (JPM)

The filing had Moore initiating a position of about 2.3 million shares in Dell Inc. (NASDAQ:DELL). Dell is currently a battleground between billionaire activist Carl Icahn and a consortium of private investors led by Silver Lake (who have founder Michael Dell’s support). Icahn appears able to finance his higher bid for the company, which has recently led the Board of Directors to ask the Silver Lake/Dell group to raise their bid in order to remain competitive. At the current price- a small discount to the proposed transaction prices- the trailing P/E is 13 though Dell’s business has been struggling.

Rounding out our list of Bacon’s cheap picks is Discover Financial Services (NYSE:DFS). Discover is valued at 11 times its trailing earnings, even though in its most recent quarterly report it showed small increases in revenue and earnings compared to the first three months of 2012 (the company recently changed its fiscal year to the calendar year). With the company buying back shares, EPS increased at an even higher rate. Given the combination of stable to growing financials and a low valuation, we think Discover is a potential value stock.

We generally think that these financial picks from Moore Global’s portfolio look interesting in value terms, and would be interested in learning more about the companies. IBM, however, would have to report better numbers before we’d fell comfortable considering it and Dell will of course only be of interest to investors interested in merger arbitrage opportunities.

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