Jim Cramer and Billionaire George Soros Agree on These Stocks

Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

CNBC host Jim Cramer has a sizable following thanks to his years as a successful hedge fund manager and to his personal style. Investors can get a good idea of his stock picks from watching his show, but can also see which stocks his charitable trust has reported owning. We compared the stocks that the trust most recently reported owning to those disclosed on billionaire George Soros’s most recent 13F filing (see Soros's stock picks); here are the five largest holdings by market value in Soros’s portfolio that the trust also owned.

Soros initiated a position of over 15 million shares in American International Group (NYSE: AIG) last quarter, making it the largest stock holding by market value in his 13F portfolio. Cramer’s trust also owned AIG, and in fact the insurer made our list of the most popular stocks among hedge funds for the third quarter (see the full top ten rankings). AIG is trading at half the book value of its equity, and our thinking would be that it probably doesn’t deserve that much of a discount; even a P/B of 0.7 or so would represent a sizable upside, and we think it’s worth considering as a value investment.

General Electric (NYSE: GE) was another common pick, with Soros increasing his stake by 22% to a total of more than 10 million shares. GE was one of Fisher Asset Management’s five favorite stocks during the third quarter; that fund is managed by billionaire Ken Fisher and his team (find more of Fisher's favorite stocks). GE currently offers a dividend yield close to 4%, and the trailing P/E of 16, while not in pure value territory, doesn’t look too high either, and income investors who like the yield shouldn’t be too worried about the valuation.

Soros also bought shares of SunTrust (NYSE: STI), with 4 million shares reported in the 13F portfolio. SunTrust is up 59% in the last year, and revenue and earnings have risen sharply as well. As a result, the current price is 9 times trailing earnings, and 0.8 times the book value of the equity--very good metrics in both cases. Billionaire Stanley Druckenmiller bought the stock during the third quarter, after not having owned any shares at the beginning of July. We think the valuation is appealing and would just need to check for any red flags.

Home Depot (NYSE: HD) was one of the newest picks in the trust’s portfolio, and Soros recently initiated a position in the retailer as well. It and peer Lowe’s were among the most popular retail stocks among hedge funds last quarter. This is likely a way to invest in a strong recovery in housing, though Home Depot at least hasn’t seen much earnings growth relative to a year ago. Considering that it carries trailing and forward P/E multiples of 22 and 18, respectively, we would avoid the stock; there are likely cheaper stocks that would also capitalize on a stronger housing recovery.

Finally, both of these investors liked the most popular stock among hedge funds: Apple (NASDAQ: AAPL), which is also (obviously) the most widely owned tech stock in our database of 13F filings. At 12 times trailing earnings, and only 9 times analyst consensus for 2013, we think that Apple is undervalued. Those multiples suggest that Apple won’t be growing its earnings at all, but we think that even if it loses market share the tablet and smartphone industry will grow fast enough to carry net income higher.


This article is written by Matt Doiron and edited by Meena Krishnamsetty. Meena has a long position in AAPL. The Motley Fool owns shares of Apple, American International Group, and General Electric Company and has the following options: long JAN 2014 $25.00 calls on American International Group. Motley Fool newsletter services recommend Apple, American International Group, and The Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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