Jim Cramer and Billionaire Ken Griffin Like 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.
Billionaire Ken Griffin’s Citadel Investment Group took severe losses during the financial crisis, but has climbed back above its high water mark and is earning profits for its investors again. We have already gone through Citadel’s 13F portfolio for the third quarter of 2012 (see Griffin's stock picks) and decided to look for common holdings between Citadel and CNBC host Jim Cramer’s charitable trust (which discloses its stock portfolio). Here are five stocks that both the hedge fund and the trust owned as of the most recent data:
Griffin and his team owned about 550,000 shares of Apple (NASDAQ: AAPL) and the technology company was one of Cramer’s picks as well. Apple still looks like a good value to us, given that its trailing earnings multiple is only 12 and at least on a historical basis its growth rates look good. The valuation is low enough that even if Apple’s growth slows considerably it should still be a good buy at the current price. Wall Street analysts are extremely bullish, with their projections for the next few years implying a five-year PEG ratio of 0.5. Apple was the most popular stock among hedge funds in the third quarter (here are the rest of the top ten).
Citadel moved heavily into Wells Fargo (NYSE: WFC) and closed September with 5.2 million shares in its portfolio. Unlike many other big banks, Wells Fargo’s valuation is greater than its book value--specifically, the P/B ratio is 1.3--but it does have a reputation as a more reliable company and in terms of earnings it is quite cheap at 10 times forward earnings estimates. Wells Fargo is Warren Buffett’s favorite big bank as Berkshire Hathaway owned over 420 million shares; this made it the holding company’s second largest holding (find more of Buffett's favorite stocks).
General Electric (NYSE: GE) was another common pick between the two portfolios and another stock that Citadel was buying a large stake in during the third quarter. Billionaire George Soros was adding shares as well, with 10.4 million shares at the end of September. GE carries trailing and forward P/E multiples of 17 and 13, respectively. The recent financial performance isn’t particularly appealing, though the stock does boast a dividend yield of 3.6%. Given the company’s stability it might be of interest to income investors.
Cramer’s trust and Citadel both owned shares of EMC Corporation (NYSE: EMC), with the hedge fund increasing its stake by 42% to a total of 5.2 million shares. At a market capitalization of $51 billion, the data storage company trades at 20 times trailing earnings. That seems like a fairly high price for a company which, in the third quarter of 2012, had its revenue and earnings increase by no more than 7% compared to the same period in the previous year. EMC was one of the most popular tech stocks among hedge funds according to our database of 13F filings, but we think that we’d avoid it.
Griffin also liked Broadcom Corporation (NASDAQ: BRCM), reporting a position of 4.2 million shares, and Cramer’s trust reported owning the semiconductor company as well. The trailing numbers don’t look good, but the sell-side expects considerably better earnings in 2013 and so the valuation is only 12 times consensus earnings for this year. Of course, we wouldn’t take these projections at face value and we’d certainly wait to actually see strong results before considering whether or not to buy. Appaloosa Management, which is managed by billionaire David Tepper, was another major investor in Broadcom.
This article is written by Matt Doiron and edited by Meena Krishnamsetty. Meena has a long position in AAPL. The Motley Fool recommends Apple and Wells Fargo & Company. The Motley Fool owns shares of Apple, EMC, General Electric Company, and Wells Fargo & Company. 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!