NCR Corporation (NCR), Newfield Exploration Co. (NFX): Billionaire Bruce Kovner’s Small Cap Picks

The filing showed that Caxton increased its stake in Saks Inc (NYSE:SKS) by 63% to a total of 1.5 million shares. The retailer is priced for growth with trailing and forward P/Es of 28 and 22, respectively; however, recent financial results have not look particularly strong as in the fourth quarter of Saks’s fiscal year (which ended in early February) sales grew only 6% compared to the same period in the previous fiscal year and earnings were down. The most recent data shows that 27% of the outstanding shares are held short.

The St. Joe Company (NYSE:JOE) rounds out our list of Kovner’s small cap picks, with the 13F showing about 410,000 shares in his portfolio. St. Joe is a $1.8 billion market cap developer of residential, commercial, and resort real estate in Florida. It’s another popular short target, with short sellers accounting for 41% of the float. St. Joe has been showing low profitability, and though revenue has been up the valuation does look challenging to us.

We don’t like St. Joe or Saks based on valuation, and in fact Saks could be a potential short as a hedge against cheaper retailers if the cost to borrow was not too high. Newfield Exploration Co. (NYSE:NFX) has a low forward P/E but we think the stock is speculative at this time. If we were to look at one of these stocks on value terms it would be NCR Corporation (NYE:NCR), and even there we would probably try to determine how well the company would have to do in the near future and then wait to see how its next quarterly report turned out.