$17 Billion Columbus Circle’s Stock Picks Include Apple
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Columbus Circle Investors is an asset manager with total assets under management of $17 billion (including $1 billion in its hedge funds strategies). The firm is managed by Donald Chiboucis. On Jan. 31, Columbus Circle filed its 13F for the fourth quarter of 2012, disclosing many of its long equity positions as of the end of December 2012. 13F filings can be useful sources of free investment ideas if an investor does further research on the included stocks and decides that they are good buys. Read on for its top five holdings by market value and compare them to previous filings.
Even after cutting its stake in Apple (NASDAQ: AAPL), the consumer technology company was Columbus Circle’s largest position at over 730,000 shares. Apple had been the most popular stock among hedge funds in the third quarter of 2012 (see the full top ten list). The recent pullback in Apple’s stock price has left it trading at 10 times trailing earnings, which seems very low for a company that should at least be able to hold its earnings steady going forward thanks to the growing tablet and smartphone markets--and therefore rising revenue--helping offset lower margins as it is forced to introduce lower-priced products particularly in emerging markets.
The firm owned 6.2 million shares of Discover Financial Services (NYSE: DFS), another apparently cheap stock. The credit card issuer trades at 9 times earnings, whether we consider trailing results or forward earnings estimates for the fiscal year ending in November 2014. The five-year PEG ratio is 0.8 as Wall Street analysts are projecting continued earnings growth over the next several years. Rob Citrone’s Discovery Capital Management initiated a position of 1.6 million shares during the third quarter of 2012; Citrone is a Tiger Cub, having previously worked for Julian Robertson at Tiger Management (Check out more of his stock picks).
Another credit card stock in Columbus Circle’s portfolio was Mastercard (NYSE: MA) with the firm reporting ownership of almost 490,000 shares. Renaissance Technologies, whose success since inception has made founder Jim Simons a multi-billionaire, was buying shares of Mastercard during Q3 2012. Mastercard carries a current-year P/E multiple of 20, which seems a bit high given its moderate growth rates of revenue and earnings. The stock has risen 35% in the last year, based on general strength in the credit card industry. We aren’t as interested in it as we would be in Discover.
Pfizer (NYSE: PFE) was another stock that Chiboucis and his team liked, with 9.3 million shares in their portfolio at the beginning of January. Billionaire Ken Fisher has named Pfizer his top stock pick for 2013; it is the largest single-stock holding by market value in Fisher Asset Management’s portfolio. The pharmaceutical company struggled in Q3 2012, with its revenue and earnings falling at double-digit rates, but the sell-side expects Pfizer to do well this year and so the current stock price is only 12 times consensus earnings for 2013. Pfizer also pays a dividend yield of 3.6% at current prices and dividend levels.
A third credit card stock, Visa (NYSE: V) rounded out Columbus Circle’s top five stock holdings. The firm owned 1.5 million shares of Visa, which was the most popular services stock among hedge funds in Q3 and is up 46% in the last year. The company’s fiscal year ended in September; in the fourth quarter of that fiscal year Visa recorded a 15% increase in revenue and a large percentage increase in net income. We do like Visa’s prospects for further growth but think that the market may have already priced in significant opportunities given the forward P/E of 19. Of course, we think it’s significant that Chiboucis is generally bullish on credit card stocks as well.
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 Visa. The Motley Fool owns shares of Apple and MasterCard. 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!