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Mix of Top Picks of Halvorsen, Greenblatt, Tepper, Chou and Kovner

January 06, 2012 | About:
Mara Kohn

Mara Kohn

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Andreas Halvorsen founded Viking Global Investors LP and currently serves as its CIO. This Greenwich-based company manages two hedge funds invested in equities worldwide. Previously, Halvorsen worked for Tiger Management LLC and Morgan Stanley. Since it was started in 1999, his Viking Global Equities III fund has gained 22% on average per year. Unfortunately, it went through a down period from September 2001 to March of 2002, when his portfolio decreased 12%.

Joel Greenblatt, known for inventing the Magic Formula Investing and founding the New York Securities Auction Corporation (NYSAC), is founder and managing partner of Gotham Capital. His strategy involves finding cheap and good companies. In his own hedge fund, Greenblatt uses the basic principals in the Magic Formula: Look for high ROC and high earnings yield. In general, five to eight securities can make up 80% of his portfolio.

David Alan Tepper is the founder of Appaloosa Management, a hedge fund investment firm based in Chatham, N.J. Tepper is well known in the Financial District thanks to his all-time record payday of $4 billion investing in near-bankrupt banks in 2009. In a word, Tepper primarily specializes in distressed debt investing. His strategy involves buying distressed debt of companies on the verge of implosion and selling it when it matures.

Francis Chou is the fund manager of Chou America Mutual Funds. He has a value-oriented approach to investing which involves a detailed analysis of the strengths of individual companies, with much less emphasis on short-term market factors. The emphasis is on the company’s balance sheet, cash flow characteristics, profitability, industry position, special strengths, future growth potential and management ability.

Mr. Bruce Stanley Kovner is the founder and chairman of Caxton Associates LLC. and also chairman of CxSynta LLC. His investment philosophy involves macro investments. He makes bets on macroeconomic trends through liquid assets, including stocks, bonds, currencies and commodities.

Here is a mix of these investors’ top picks:

Apple (AAPL): The company designs consumer electronic devices, including PCs (Mac), tablets (iPad), phones (iPhone), and portable music players (iPod). In addition, it has the largest online music distributor across the globe: iTunes. In early 2011, Apple launched the Mac app online store that sells first and third-party applications for Mac desktop and notebook computers.

AAPL has made millions with its electronic devices, particularly iPod, iPhone and iPad. However, it has not distributed said monies. On the contrary, it has decided to preserve them to continue growing. Indeed, Apple still has many new markets to dominate.

Now Apple has iCloud on the horizon and is thinking of re launching Apple-TV and developing a new future.

Dolby Laboratories (DLB) develops audio and surround sound for cinema, broadcast, home audio systems, in-car entertainment systems, DVD players, games, televisions, and personal computers. Its presence in movie theaters and home audio equipment segments has resulted in high royalty income.

As regards broadcast television, Dolby is making progress so that it can become the next key driver. Indeed, the innovative performance and historical recognition have positioned Dolby in a place to capitalize on new opportunities.

Apart from having operations in the U.S., Dolby is starting to be accepted in new markets such as France, South Korea and Brazil and is making great efforts to have access to mobile phones and online content delivery markets.

Financially speaking, the third quarter has reported earnings of $243.77 million. Net income was $79.07 million. It has quarterly revenue growth of 7%, and a return on equity of 19.53%. In terms of balance sheet, Dolby is healthy with more than $1 billion in cash and investments with minimal debt.

E*Trade (ETFC) is an online discount brokerage and bank with headquarters in New York. It offers sweep, checking and savings products to its brokerage clients.

E*Trade is currently trading at $7.73 per share. It has a market cap of $2.25B and a P/E ratio of 17.56. The company looks better with each passing quarter, especially as it continues to trade around and under $8.00 per share with a book value of about $17.00 per share.

Unfortunately, activist investor Citadel, one of the largest holders, sold much of its stake this year.

Sears Holdings Corporation (SHLD) is the fourth-largest broadlines retailer in the U.S. Unfortunately, Sears has gone through six consecutive years of poor growth after merging with Kmart in 2005.

Despite this situation, there are still expectations of improvement in operating results for the years to come. Sears has suffered from the recent economic downturn given its popularity among ethnic and working-class customers and its historical strength in home appliances and other housing-related consumer hard goods categories.

Customers within these segments have been highly affected by increases in commodity costs and the housing downturn.

Sears Holdings announced a loss for the third quarter ended October. The loss per share was $3.95 versus $1.98 last year.

Aon (AON): Aon provides insurance brokerage and related risk and human resources consulting services worldwide. It operates in more than 100 countries.

In terms of quarter results, the company reported revenue growth of 51% year over year, which was boosted by acquisitions and favorable currency movements. Setting aside these events, organic growth was only 1%.

AON may reveal significant rewards since it will merge with Hewitt in 2012. It is trading at a forward P/E of 13.64 and has an expected EPS growth of 8.3%. In addition to the upside potential, AON has a 1.3% dividend yield.

Rating: 2.4/5 (5 votes)

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