Bill Miller is the CFA, Chairman and CIO of Legg Mason Capital Management. The hedge fund is the latest to join the most recent round of 13F filings, which detail the smart money’s equity positions for the past quarter. By paying attention to hedge fund sentiment, retail investors can beat the market if they know where to look; discover the secrets of this strategy.
With this in mind, let’s take a look at the top five picks in terms of value from Legg Mason’s latest 13F. No. 1 is JPMorgan Chase & Co. (NYSE:JPM), in which the hedge fund disclosed ownership of 3.5 million shares, worth $186.6 million. The position remained almost unchanged over the quarter, decreasing by 33,600 shares. The stock of JPMorgan Chase & Co. (NYSE:JPM) has returned over 23% since the beginning of the year and trades at a P/E of 9.0x.
JPMorgan Chase & Co. (NYSE:JPM) is followed in Legg Mason’s 13F by Apple Inc. (NASDAQ:AAPL). During the second quarter of 2013, the hedge fund disclosed a $180 million stake in Apple Inc. (NASDAQ:AAPL), which contains 453,882 shares, increasing by 87,135 shares since the end of March. The year-to-date return of Apple Inc. (NASDAQ:AAPL)’s stock is near -5%, while the forward P/E and PEG ratios amount to 11.5x and 0.6x respectively. Apple is one of the most popular companies among hedge funds, and is a favorite of David Einhorn, the manager of Greenlight Capital, D. E. Shaw, the manager of D E Shaw and the manager of Fisher Asset Management, Ken Fisher.
No.’s 3 and 4 in Legg Mason’s 13F are Metlife Inc (NYSE:MET) and McDonald’s Corporation (NYSE:MCD). In Metlife Inc (NYSE:MET), the hedge fund’s position involves almost 3.1 million shared, down by 324,725 shares over the quarter, while McDonald’s Corporation (NYSE:MCD) is represented in Legg Mason’s equity portfolio by 1.4 million shares, down by 17,440 shares. The value of the stakes amount to $139.6 million and $137.5 million respectively. Metlife Inc (NYSE:MET) and McDonald’s Corporation (NYSE:MCD)’s stocks have returned over 48% and 8.9% respectively, in 2013.
Lastly, we have UnitedHealth Group Inc. (NYSE:UNH). Legg Mason reported ownership of almost 2.1 million shares of the company, with the value of the stake amounting to $136.7 million. In the previous round of 13F filings, Legg Mason’s stake in UnitedHealth Group Inc. (NYSE:UNH) involved 2.1 million shares, and its value was worth $120.6 million. Since the beginning of the year, shares of the healthcare giant have returned slightly below 34%, while the forward P/E ratio amounts to 12.5x and the PEG ratio is almost 1.6–average, at best.
On the whole, there are more than 200 positions in the Legg Mason’s equity portfolio, and its value amounts to $5.6 billion, down a bit from Q1’s value of $5.7 billion.
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