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Billionaire Stephen Mandel’s High Upside Potential Picks Include Michael Kors

Lone Pine disclosed ownership of 5.9 million shares of Wyndham Worldwide Corporation (NYSE:WYN) as of the end of 2012, roughly even with what it had owned three months earlier. The hotel and vacation ownership company is another one where investors are depending on substantial bottom-line growth: the stock carries trailing and forward P/Es of 23 and 15, respectively. Iridian Asset Management, run by David Cohen and Harold Levy, was another major shareholder of Wyndham according to its own 13F (check out Iridian’s stock picks).

Mandel and his team initiated a position of 4.4 million shares in Capital One Financial Corp. (NYSE:COF) between October and December. Capital One, unlike the companies we’ve discussed thus far, qualifies for value status at a trailing P/E of only 9. At that pricing, it only needs to keep its business steady to weakly growing in order to prove undervalued. It also trades at a discount to the book value of its equity. Last quarter fellow Tiger Cub Andreas Halvorsen’s Viking Global increased its own holdings of Capital One to nearly 14 million shares (research more stocks Halvorsen was buying).

WABCO Holdings Inc. (NYSE:WBC) rounds out our list of Mandel’s picks with high upside potential as the $4.5 billion auto parts manufacturer boasts a five-year PEG ratio of 0.8. It’s another company with significant macro exposure, as shown by the beta of 2.3. Analysts are generally bullish on companies tied to autos, and WABCO in fact trades at a premium to many automakers and auto parts manufacturers in terms of its trailing earnings. Warren Buffett and Berkshire Hathaway were buying the stock last quarter (see more stocks that Buffett likes).

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

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