When we went through the most recent 13F filing for Cliff Asness’s AQR Capital Management (we track 13Fs from hundreds of hedge funds and other notable investors as part of our work developing investment strategies- we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year), we noticed a number of stocks meeting the traditional value criteria of low earnings multiples. We don’t recommend blindly buying these “cheap” stocks, but think that they can be a useful starting point for finding value opportunities worthy of further research. Read on for our quick take on AQR’s five largest holdings as of the end of March (this information is a bit out of date, but many of these positions did not change much during Q1 and so might be meant as longer-term picks) with both trailing and forward P/Es of 12 or lower or see the full list of stocks the fund reported owning.
AQR reported a position of 3.2 million shares in Exxon Mobil Corporation (NYSE:XOM), about even with what it had owned at the beginning of 2013. Exxon Mobil trades at 11 times forward earnings estimates, which places it at a small premium to many oil and gas majors on that basis. Similarly, the 2.8% dividend yield is decent but lower than can be found at many of its peers. While its net income was about flat in the first quarter of 2013 versus a year earlier, revenue fell by 13%. The Bill and Melinda Gates Foundation Trust was the largest Exxon Mobil Corporation (NYSE:XOM) shareholder out of the filers we track (check out more stocks the trust owns).
Asness and his team also kept their stake in Chevron Corporation (NYSE:CVX) about constant between January and March. Chevron’s forward P/E is 10, and at current prices and dividend levels it offers a 3.4% yield. It has been recording declines in both revenue and earnings in recent reports, but we suppose that this does make it a bit cheaper than Exxon Mobil (though still higher priced than some other majors). Fisher Asset Management, managed by billionaire Ken Fisher, had 3.6 million shares in its portfolio at the end of the first quarter of 2013 (find Fisher’s favorite stocks).