Five Ideas From One of the Big Guns
Hedge funds' 13F filings are filed within 45 days of the end of each quarter, but we have found it possible to build profitable trading strategies around these quarterly disclosures. Stocks named in these filings, after all, can be used as free recommendations. The most popular small-cap stocks among hedge funds, for instance, earn an average excess return of 18% per year. So even if most of the reported holdings aren't attractive, there are still good finds among them -- or, at least research ideas.
With that in mind, let's take a look at the five largest positions reported by Kerr Neilson's Platinum Asset Management (which you can compare with those in previous filings). At the end of 2012, Platinum owned more than 37 million shares of Bank of America (BAC), making the megabank its largest holding by market value. BofA is arguably a very cheap stock in terms of market capitalization vs. equity book value, as the price-to-book ratio is 0.6. Still, revenue and earnings were both down sharply in the fourth quarter from a year earlier, and when we focus on the bottom line instead, the bank does not look cheap. Even if it recovers in line with sell-side estimates, it will remain at least as pricy as other large banks in terms of the forward price-to-earnings ratio....354 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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