Seth Klarman’s Latest Stock Picks Include AIG

Oracle trades at 16 times trailing earnings and so given the combination of value and recent growth it may be worth considering. HP, meanwhile, looks appealing in terms of value metrics but we wouldn’t have the courage to buy- and Klarman backing out doesn’t make us think more positively of the company. Ralph Whitworth’s Relational Investors had been another major HP shareholder in the third quarter (find Relational’s favorite stocks).

Selling Allied Nevada. Klarman sold a little over 2 million shares of Allied Nevada Gold Corp. (NYSE:ANV), which still left the fund with a large position but may signal lower confidence. The $2.1 billion market cap gold miner saw its earnings fall in its most recent quarterly report from their levels a year before, though revenue has been up (likely on rising production). The current-year P/E is 16. We don’t think that Klarman and his team were generally bearish on gold because they actually slightly increased their stake in NovaGold Resources Inc. (NYSE:NG).

We agree with Baupost that AIG has value potential, and think that investors should consider the stock. Allied Nevada is too dependent on gold prices, and therefore speculative, for our taste and we have mentioned that we can’t bring ourselves to buy HP either despite what looks to be a very cheap earnings multiple.

Disclosure: I own no shares of any stocks mentioned in this article.