In mid February, hedge funds and other major investors filed their 13Fs with the SEC; these filings disclosed many of their long equity positions as of the end of December. Even though there is a lag in this information, there are still multiple ways for investors to use it. For example, the most popular small cap stocks among hedge funds produce an average excess return of 18 percentage points per year (learn more about hedge funds’ small cap stock picks). Investors can also use stock picks from individual fund managers as free recommendations to research further if they seem appealing. Read on for our quick take on five of billionaire Michael Price’s largest holdings in stocks with both trailing and forward P/E multiples less than 15 (or see the full list of stocks his MFP Investors reported owning):
Intel Corporation (NASDAQ:INTC) was one of Price’s top stock picks at a position of 1.7 million shares. Intel’s revenue was down 3% last quarter compared to the fourth quarter of 2011, which contributed to a 27% fall in earnings. The stock trades at 10 times earnings, both in terms of its trailing performance and in terms of analyst consensus for 2014. The dividend yield is also above 4%, though Intel does face some threats to its industry. Renaissance Technologies, whose success since inception has made founder Jim Simons a billionaire, reported owning almost 20 million shares in its own 13F (see Renaissance’s stock picks).
The 13F reported 1.8 million shares of Symetra Financial Corporation (NYSE:SYA), a $1.9 billion market cap life insurance company, at the end of December. Symetra is another company where Wall Street analysts are expecting little growth, with the result being that both the trailing and forward P/Es come in at 9. In addition, the stock trades at a steep discount to the book value of its equity at a P/B ratio of 0.5. However, earnings were down sharply in Q4 versus a year earlier. Jonathon Jacobson’s Highfields Capital Management cut its stake by 7% between October and December, closing 2012 with 3.9 million shares in its portfolio.
Warren Buffett also likes this energy company:
Price owned almost 350,000 shares of oil major ConocoPhillips (NYSE:COP). Warren Buffett also likes the company, with his holding company Berkshire Hathaway disclosing ownership of over 24 million shares at the end of the fourth quarter of 2012 (find Buffett’s favorite stocks). Analyst estimates for 2014 imply a forward P/E of 10, which is roughly even with where other oil majors are trading. Of course, ConocoPhillips has significant commodity pricing risk due to its oil and gas activities. We would also note that the stock has paid a substantial dividend yield recently.
Becton, Dickinson and Co. (NYSE:BDX), a provider of medical devices and instruments with a market capitalization of $17 billion, was another of Price’s top picks and it too is cheap in quantitative terms with a forward earnings multiple of 14. The company experienced a large percentage increase in earnings in its most recent quarter compared to the same period in the previous year (helping give it an abnormally high trailing earnings figure) but revenue growth was much lower. Billionaire Ken Griffin’s Citadel Investment Group was buying shares of Becton Dickinson last quarter (research more stocks Griffin was buying).
Price kept his holdings of Kaiser Aluminum Corp. (NASDAQ:KALU) constant at a little over 300,000 shares. At a market capitalization of $1.2 billion, Kaiser trades at 14 times its trailing earnings following a 30% increase in the stock price in the last year. In the fourth quarter of 2012, net income was up considerably from its levels a year ago but revenue was actually down slightly; as a result we’d want to sort out its current condition before deciding whether or not it actually is a value stock. Carlson Capital, managed by Clint Carlson, owned about 440,000 shares of Kaiser Aluminum at the beginning of January (check out more stocks Carlson owned).
Disclosure: I own no shares of any stocks mentioned in this article.
