Caxton Associates' Stocks Trading at Low P/E

Holdings are undervalued by more than 50%

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Nov 03, 2015
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Bruce Stanley Kovner is the founder and chairman of Caxton Associates (Trades, Portfolio), L.L.C.

According to GuruFocus the hedge fund manages a $2,681,000,000 portfolio composed of 140 stocks and the following are the ones trading with the highest margin of safety and with a very low P/E ratio.

Apple Inc.

Apple Inc. (AAPL) is trading at about $121 with a trailing 12-month P/E multiple of 13.20 and an estimated forward P/E multiple of 11.96. Over the last 10 years, the stock has risen by 1,287%, and during the last 52 weeks the price has been as high as $134.54 and as low as $92.00.

The DCF model gives a fair value of $261.91, putting the stock at undervalued with a margin of safety of 54% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $133.9.

The company designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications.

Apple had an amazing quarter, with iPhone revenue up 59% over last year and strong sales of Macs. Driven by the App Store and a great start for Apple Watch, it had strong sales of Mac and a record revenue from services. The year-over-year growth rate accelerated from the first half of fiscal 2015, in which revenue grew by 33% and earnings per share grew by 45%.

Carl Icahn (Trades, Portfolio) is the company's leading shareholder among the gurus with a stake of 0.95% of outstanding shares, followed by Ken Fisher (Trades, Portfolio) with 0.2%, Jeremy Grantham (Trades, Portfolio) with 0.14% and David Einhorn (Trades, Portfolio) with 0.13%.

Sasol Ltd.

Sasol Ltd. (SSL) is trading at about $33 with a trailing 12-month P/E multiple of 9.36 and an estimated forward P/E multiple of 13.23. Over the last 10 years, the stock is flat; during the last 52 weeks the price has been as high as $51.10 and as low as $26.81.

The DCF model gives a fair value of $64.93 that puts the stock at undervalued with a margin of safety of 49% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $60.

The company is an international integrated energy and chemicals company. It develops and commercializes technologies and builds and operates facilities, to produce product streams, including liquid fuels, high-value chemicals and low-carbon electricity.

The company's leading shareholder among the gurus is Ron Baron (Trades, Portfolio) with a stake 0.03% of outstanding shares that is 0.03% of his total assets, followed by the investor Jeremy Grantham (Trades, Portfolio) with 0.02% and Bernard Horn (Trades, Portfolio) who holds 0.01% of outstanding shares.

NeuStar Inc.

NeuStar Inc. (NSR) is trading at about $28 with a trailing 12-month P/E multiple of 8.75 and an estimated forward P/E multiple of 7.42. Over the last 10 years, the stock has dropped by 9%, and during the last 52 weeks the price has been as high as $32.66 and as low as $20.32.

The DCF model gives a fair value of $92.81 that puts the stock at undervalued with a margin of safety of 69% at current prices. The Peter Lynch earnings line suggests a smaller margin of safety, giving a fair price of $47.5.

NeuStar is a provider of real-time information services and analytics, using authoritative, hard-to-replicate datasets and proprietary analytics to help its clients promote and protect their businesses.

For the third quarter NeuStar delivered double-digit revenue growth in both Marketing and Security Services with an increase of 7% for revenue and net income per share increased 8% in which these results demonstrated momentum in Information Services.

PRIMECAP Management (Trades, Portfolio) is the company's main shareholder among the gurus with a stake of 14.90% of outstanding shares. Joel Greenblatt (Trades, Portfolio) is the second one with a stake of 3.15% of outstanding shares, followed by Ronald Muhlenkamp (Trades, Portfolio) with 0.56%.

Bank Bradesco

Bank Bradesco. (BBD) is trading at about $5 with a trailing 12-month P/E multiple of 7.40. Over the last 10 years, the stock has dropped by 3%, and during the last 52 weeks the price has been as high as $13.78 and as low as $5.

The DCF model gives a fair value of $17.9 that puts the stock as undervalued with a margin of safety of 69% at current prices. The Peter Lynch earnings line confirms the same fair price.

The company is one of the biggest banking and financial services companies in Brazil. Bradesco was the largest private bank in Brazil until Banco Itaú and Unibanco merged in 2009.

During the third quarter the company has not been traded by any hedge fund while during the second quarter its main shareholders heavily cut their stakes: Jim Simons (Trades, Portfolio) by 77.97% and Jeremy Grantham (Trades, Portfolio) by 89.10%.

CNOOC Ltd

CNOOC Ltd. (CEO) is trading at about $112 with a trailing 12-month P/E multiple of 5.06 and an estimated forward P/E multiple of 12.00. Over the last 10 years, the stock has risen by 72%, and during the last 52 weeks the price has been as high as $175.60 and as low as $97.40.

The DCF model gives a fair value of $330.44 that puts the stock as undervalued with a margin of safety of 66% at current prices. The Peter Lynch earnings line confirms almost the same margin of safety giving a fair value of $318.8.

CNOOC and its subsidiaries are engaged in the exploration, development, production and sale of crude oil, natural gas and other petroleum products. The company reports the business through three reporting segments: exploration and production ("E&P"), trading business and corporate.

During the third quarter net production increased by 23.8% year over year, but oil and gas sales revenues decreased 23.3% year over year. The company had three new discoveries and 14 successful appraisal wells.

The company's leading shareholder among the gurus is Jim Simons (Trades, Portfolio) with a stake of 0.03% of outstanding shares, followed by Sarah Ketterer (Trades, Portfolio) with 0.02% and the firm Manning & Napier Advisors Inc. with an easy stake of 0.01%.