We track 13F filings from hedge funds and other notable investors for a variety of purposes. According to our research thus far, the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year (learn more about our small cap strategy) and we are working on finding other strategies as well. Many investors use 13Fs as a list of recommendations from top investors and by screening their picks with traditional value criteria we can generate potential ideas for investors to research further if they think that the company sounds interesting. Here are our brief thoughts on the five largest holdings by market value that billionaire Stanley Druckenmiller reported owning with both trailing and forward P/Es of 14 or lower (or see the full list of stocks from the 13F):
Druckenmiller reported a position of 3.4 million shares in Pfizer Inc. (NYSE:PFE) at the end of the fourth quarter of 2012. Pfizer topped our list of the most popular healthcare stocks among hedge funds for the fourth quarter (find more healthcare stocks hedge funds loved) with 77 filers in our database of hedge funds and other notable investors owning it. The dividend yield is decent here, at 3.4% going by recent dividend payments and the current price, and in terms of value Pfizer is at least somewhat attractive at a trailing earnings multiple of 14. The beta of 0.7 is low, though higher than can be found at some other healthcare companies.
The billionaire initiated a position of over 4 million shares in US Airways Group, Inc. (NYSE:LCC), which is set to buy American Airlines out of bankruptcy. In theory, the new company would realize synergies as well as be capable of raising fares due to a consolidated industry. US Airways has more than doubled in price in the last year, yet earnings multiples are still low; however, there should be at least some concern about the fact that M&A tends to destroy shareholder value. Billionaire David Tepper’s Appaloosa Management sold some shares of US Airways but still owned over 12 million shares (check out Tepper’s stock picks).
Read on for three more of Druckenmiller’s stock picks: