We think that one of the best ways to narrow down the wealth of opinions that Jim Cramer provides on CNBC is to focus on the stocks owned by his charitable trust. From that point, we can narrow them down even further by checking the trust’s holdings against the portfolios of other notable investors, against quantitative screens, by industry, or some other method. Billionaire Steve Cohen’s SAC Capital Advisors has an estimated $14 billion under management, and Cohen himself has made about $8 billion from his investing activities. After SAC released its most recent 13F (find billionaire Steve Cohen’s favorite stocks), we noticed some overlap between the stocks that these two famous investors liked. Here are three stocks that were among SAC’s ten largest 13F stock positions by market value as of the end of September and which Cramer’s charitable trust had reported owning:
Cohen and his investment team moved heavily into American International Group, Inc. (NYSE:AIG) and the insurer was SAC’s second largest stock holding at the end of the quarter according to the 13F. SAC wasn’t alone in liking AIG during the quarter: with many hedge funds initiating positions in the stock, it took the #3 slot on our list of the most popular stocks among hedge funds (see the full rankings). It’s easy to see why AIG is becoming so popular: partly due to turned-up noses from retail investors, it trades at about half the book value of its equity. Wall Street analyst expectations imply a forward P/E multiple of 9 and a five-year PEG ratio of 0.4. Of course, AIG probably should trade at a discount to book value given the riskiness of its assets, but probably a smaller discount. As a result we think that it’s still a value play even after rising substantially in the last year.
Apple Inc. (NASDAQ:AAPL) was another common pick between Cramer’s trust and SAC. The hedge fund cut its stake by 12% but Apple- which actually topped our list of the most popular stocks- was still one of its largest positions by market value. Apple Inc. (NASDAQ:AAPL)’s stock price went through a correction in the last few weeks, but now it is rallying. At 13 times trailing earnings, with high growth over the last year, we still think that it is an excellent value stock even if that growth rate falls to near zero. Apple is dealing with increased competition, as Google Inc (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) continue to innovate in the tablet space, but it’s tough to make an argument in favor of buying one of these stocks instead. Google’s trailing P/E multiple is 21 as the addition of Motorola Mobility Holdings has negatively impacted its earnings so far, and pay per click rates may be slipping as well. We expect its earnings to grow going forward, but we don’t think it deserves that much of a premium to Apple Inc. (NASDAQ:AAPL). Amazon continues to trade at very high multiples- 138 times forward earnings estimates, and even that is based on a high earnings growth rate in 2013. The company is obviously doing quite well on the top line, and has a number of good prospects for further increasing sales, but Amazon recorded a net loss last quarter and may not even be profitable for 2012.
Cramer liked oil and gas services company Schlumberger Limited. (NYSE:SLB), and SAC’s ownership in the stock remained strong during the quarter. Schlumberger is benefitting from increased development of oil and gas resources in the U.S., which has contributed to increases of about 10% in revenue and earnings in the third quarter versus a year ago. Billionaire Stephen Mandel’s Lone Pine Capital initiated a position of 6.4 million shares in Schlumberger during the third quarter (check out more of billionaire Stephen Mandel’s stock picks). The stock now carries trailing and forward P/E multiples of 17 and 14, respectively. This is a premium to peer Halliburton, and even though that company’s business hasn’t been doing as well recently we’d advise investors to consider it as a cheaper alternative to Schlumberger.