Billionaire Stephen Mandel’s New Stock Picks Include H&R Block, Inc. (NYSE:HRB)

Thermo Fisher Scientific Inc. (NYSE:TMO) was another of Lone Pine’s new stock picks. The medical instruments and equipment company grew its net income by 21% in the first quarter of 2013 versus a year earlier, though revenue was up only 4% and so we’d be concerned as to how sustainable this recent earnings growth actually is. The market is currently pricing in high growth going forward, with a trailing P/E of 26. Billionaire Dan Loeb’s Third Point also took a new position in Thermo Fisher in the first quarter of 2013 (research more stocks Loeb has been buying).

The filing disclosed ownership of 3.5 million shares of CME Group Inc (NASDAQ:CME), which operates futures exchanges. The stock carries trailing and forward P/Es of 26 and 19, respectively, but business has actually been down in contrast to the growth implied in this valuation. CME does pay a dividend yield of nearly 3% at current prices and dividend levels; still, we’d avoid the stock at least until it managed to deliver improvements on its bottom line. Citadel Investment Group was also buying CME during Q1, closing March with 1.1 million shares in its portfolio; that fund is managed by billionaire Ken Griffin (find Griffin’s favorite stocks).

Lone Pine owned 6.8 million shares of H&R Block, Inc. (NYSE:HRB), which has soared over 90% in the last year. Wall Street analysts are expecting $2.60 in EPS for its fiscal Q4, which ended in April (the company is often unprofitable the other three quarters of the fiscal year). Even with the sell-side forecasting considerable increases in earnings per share both for that quarter and over the next fiscal year, H&R Block is valued at 16 times forward earnings estimates, meaning it would need more growth beyond that point to justify the current valuation. Julian Robertson– the mentor of the Tiger Cubs- included H&R Block among his top picks according to his own 13F.

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