7 ‘Diamonds In The Rough’ To Consider
A few ideas to mull over during your snowless weekend.. If only you could short squeeze La Nina out of the picture.
Contrarian investors, like David Dreman, tend to focus on stocks that are against the crowd. These are the stocks that a lot of people are not buying, the underdogs. But, investing is not a popularity contest. Sometimes, just the momentum of trading (or lack thereof) can push a stock’s price lower, leaving more upside for the “contrarian” investor.
Here is a list of 7 “diamonds in the rough” to consider. The companies on our list have large market caps, low forward P/E ratios, and strong hedge fund investment.
BP, Plc (BP): BP has a market cap of $139.35 billion and is currently trading at 6.76 times its forward earnings. This company was on several hedge fund radars at the end of the third quarter, including Seth Klarman’s Baupost Group. The fund had $495.64 million invested in BP at the end of September after increasing its holding in the company by +150% during the third quarter. It recently traded at $44.06 a share.
Total SA (TOT): TOT has a market cap of $119.91 billion and is currently trading at 7.10 times its forward earnings. Jim Simons’ Renaissance Technologies increased its stake in TOT significantly during the third quarter. Simons wasn’t alone in his interest. Of the 350+ hedge funds we track, 8 initiated new positions in TOT during the third quarter and another 5 increased their holdings. It recently traded at $50.84 a share.
Citigroup (C): C has a market cap of $91.42 billion and is currently trading at 7.17 times its forward earnings. Citigroup made it to the top of several hedge fund portfolios during the third quarter. Bill Ackman’s Pershing Square had $669.30 million in C after upping its holding in the company at the end of September by +11% during the third quarter. The position accounts for over 11% of the Pershing Square portfolio. John Paulson’s Paulson & Co. was also a fan with a $643.12 million position at the end of the third quarter. Citigroup recently traded at $31.27 a share.
ENI Spa (E): E has a market cap of $84.15 billion and is currently trading at 8.13 times its forward earnings. Both Jim Simons’ Renaissance Technologies and David Dreman’s Dreman Value Management increased their holdings in E during the third quarter. Steve Cohen’s SAC Capital Advisors and John Overdeck’s Two Sigma Advisors were also fans. Both funds initiated new positions in E during the third quarter. It recently traded at $42.02 a share.
Statoil A S A (STO): STO has a market cap of $80.61 billion and is currently trading at 8.96 times its forward earnings. Jim Simons’ Renaissance Technologies initiated a new $8.55 million position in STO during the third quarter. Steve Cohen’s SAC Capital Advisors, John Overdeck’s Two Sigma Advisors, David Dreman’s Dreman Value Management and Israel Englander’s Millennium Management also had positions in STO at the end of the third quarter. It recently traded at $25.28 a share.
Astrazeneca Plc (AZN): AZN has a market cap of $60.44 billion and is currently trading at 7.66 times its forward earnings. Jim Simons’ Renaissance Technologies had $36.98 million in AZN at the end of September after increasing its holding in the company by +49% during the third quarter. David Dreman’s Dreman Value Management and John Overdeck’s Two Sigma Advisors were also fans. It recently traded at $46.80 a share.
MetLife, Inc. (MET): MET has a market cap of $37.85 billion and is currently trading at 7.09 times its forward earnings. Ralph Whitworth’s Relational Investors had $372.31 million in MET at the end of the third quarter. Ken Griffin’s Citadel Investment Group and John Paulson’s Paulson & Co also held significant positions in the company at the end of September. It recently traded at $35.79 a share.