Vivus, Inc. (VVUS) & Other Mind-Blowing Moves: Billionaire Richard Chilton’s Small Cap Picks

Chilton reported ownership of 5.3 million shares of Atmel Corporation (NASDAQ:ATML), a $3 billion market cap semiconductor designer and developer. Here the stock price is down 28% in the last year as business has been weak- to be specific, in the fourth quarter of 2012 sales were down 10% versus a year earlier. The sell-side expects Atmel Corporation (NASDAQ:ATML) to recover, and in fact the forward P/E of 12 would appear to be quite low, but we aren’t convinced that the company is going to be able to improve its earnings in line with expectations and so we would avoid the stock.

First Horizon National Corporation (NYSE:FHN) rounds out our list of small cap picks from the fund. Chilton had 3.1 million shares of the Tennessee-based regional bank in its portfolio at the end of 2012 after adding a small number of shares during Q4. First Horizon National is valued at a small premium to the book value of its equity with a P/B ratio of 1.1. The bank struggled with profitability in 2012 as a whole, but did deliver profits in the second half of the year and consensus earnings for 2014 imply a forward P/E of 11.

First Horizon National Corporation (NYSE:FHN) therefore looks like it does have some value prospects, though we’d have to look into what caused the poor conditions in early 2012 to help us determine if the bank is actually in the clear. DineEquity also looks somewhat interesting- as a high yield restaurant stock it could be an alternative to Darden Restaurants, and it’s possible that the franchise model will provide a particularly stable source of cash flow and earnings with little dependence on macro factors.

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