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Curtis Macnguyen & Ivory Capital’s Stock Picks Include Google Inc (GOOG)

We track quarterly 13F filings from hundreds of hedge funds and other notable investors, having found that the information in these filings can be useful in developing investment strategies; for example, the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year. In addition, while the information in 13Fs is a bit out of date by the time it is released and so we don’t recommend blindly following hedge fund picks, it’s also possible to treat individual filings as lists of free initial investment ideas- similarly to the process of running a stock screen- and then performing further research on any interesting names. Read on for our thoughts on the five largest stock positions as of the end of March from Curtis Macnguyen’s Ivory Capital (or see the full list of the fund’s stock picks).

Ivory reported owning 3.5 million shares of American International Group Inc (NYSE:AIG) in the filing. The insurer is arguably a value play in that it trades at a significant discount to the book value of its equity, with a P/B ratio of 0.7. Of course, American International Group Inc (NYSE:AIG)’s struggles during the financial crisis probably mean that it doesn’t deserve to trade at book, but Wall Street analysts believe that earnings will be good enough in 2014 to result in a forward earnings multiple of 11. As a result we think it’s worth looking into American International Group Inc (NYSE:AIG)’s upside potential.

Curtis MacnguyenAnother potential value prospect in Ivory’s portfolio was Western Digital Corp. (NASDAQ:WDC). The data storage drive company’s revenue has been up nicely, but earnings performance has been more mixed, in the first nine months of its last fiscal year (which ended in June) net income was up overall compared to a year ago but there was a noticeable decline during fiscal Q3 against the prior year period. The stock price has more than doubled in the last year, but is still arguably cheap with both its trailing and forward P/Es coming in at 8.

Macnguyen and his team initiated a position of 3.3 million shares in Morgan Stanley (NYSE:MS) between January and March of this year. Morgan Stanley (NYSE:MS)’s stock price has been a strong performer over the last year, rising by nearly 90%. The sell-side is also bullish on the company and so even with this rise their forecasts have the stock valued at 10 times forward earnings estimates. This is actually about par for the course among megabanks; Morgan Stanley is, we’d note, different from Citigroup Inc. (NYSE:C) or Bank of America Corp (NYSE:BAC) in being more a pure play investment bank.

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