Apple Inc. (NASDAQ:AAPL) is still loved by plenty of billionaires, despite its trials and tribulations over the better part of the past three quarters.
Insider Monkey develops strategies based on quarterly 13F filings from hedge funds and other notable investors. We’ve found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy) and our own portfolio based on these filings in real time has outperformed the market by 33 percentage points in the last 11 months. Our database also keep tracks of which funds are managed by billionaires, and so can pick out which stocks of any size are most widely owned by these funds. Read on for the five stocks owned by the largest number of funds managed by billionaires as of the end of March.
We tracked 47 billionaires or their funds with long positions in General Motors Company (NYSE:GM) at the end of Q1 2013. The automaker was also well liked in general, making our list of the most popular stocks among all hedge funds (check out the full top ten list). General Motors Company (NYSE:GM)’s earnings actually declined last quarter compared to the second quarter of 2012, despite a small increase in revenue. It is now valued at 13 times trailing earnings; Wall Street analyst expectations imply a forward P/E of 8 and a five-year PEG ratio of 0.7. Part of the bull case for the stock is that U.S. consumers will soon have to replace a historically aged auto fleet.
Billionaires also liked Citigroup Inc (NYSE:C). One of the 45 owners of the bank at the beginning of April was billionaire David Tepper’s Appaloosa Management, reporting a position of 8.5 million shares (find Tepper’s favorite stocks). Citigroup Inc (NYSE:C) is still valued at a discount to the book value of its equity, with a P/B ratio of 0.8, and it is another stock where the sell-side is optimistic about future performance: the forward earnings multiple is 9 and the five-year PEG ratio is 0.7. Along with many other megabanks, the company reported excellent results for the second quarter of the year and value investors should consider it along with its peers.
41 billionaires or funds managed by billionaires had Apple Inc. (NASDAQ:AAPL) in their portfolios. Even after a July rally, the stock is still down 14% year to date as the company has been reporting lower margins and therefore lower profits. At its current market cap Apple Inc. (NASDAQ:AAPL) trades at 12 times trailing earnings, and that is with its large hoard of cash and marketable securities included. We do expect some continued decreases in net income, but it’s worth watching to see what management does with its cash. In billionaire David Einhorn’s Greenlight Capital’s most recent 13F, the fund had over $1 billion invested in Apple Inc. (NASDAQ:AAPL) (see Einhorn’s stock picks).
American International Group Inc (NYSE:AIG) was another of billionaires’ favorite stocks; Third Point, managed by billionaire Dan Loeb, owned more than 13 million shares of the bailed-out insurer (research more stocks Loeb likes). American International Group Inc (NYSE:AIG) has been selling off some of its assets, and the stock has returned 50% in the last year; still, its price-to-book ratio is 0.7 and so it could still be thought of as a potential value play. The company recently announced that it had begun buying back shares and would increase its dividend, signaling that management believes AIG is on a more stable financial footing.
According to our database, 40 billionaires had positions in Comcast Corporation (NASDAQ:CMCSA), making the cable company and owner of NBC Universal the fifth most popular stock among billionaires. The trailing and forward earnings multiples here are 18 and 16 respectively- not pure value territory, but in line with peers such as The Walt Disney Company (NYSE:DIS). Revenue grew 7% in the second quarter of 2013 versus a year earlier, and net income increased by nearly 30%. That level of margin improvements is not sustainable, but even if future profits grow at a similar rate as revenue Comcast Corporation (NASDAQ:CMCSA) could prove to be a “growth at a reasonable price” pick.
Disclosure: I own no shares of any stocks mentioned in this article.