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TheStreet Open House

Apple Favorite for 7 Top Hedge Fund Managers

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Insider Monkey) --Nowadays readers have access to Websites that track the daily changes in billionaires' wealth. We wanted to track the performance of billionaires' top stock picks. By looking at our Billionaire Hedge Fund Index , investors may be able to decide whether it makes sense to imitate billionaires' stock picks without paying them hefty fees.

Warren Buffett , George Soros , John Paulson , Jim Simons , David Einhorn , Ray Dalio , and T. Boone Pickens are among the 39 billionaires we're tracking. Billionaire fund managers' top 30 stock picks returned 16.7% in 2012 as of March 16, vs. 12.3% gain in the S&P 500 ETF (SPY). Here are the top 7 stocks they're crazy about:

1. Apple (AAPL) is the most popular stock among billionaire fund managers. Nearly half of them had a large position in Apple at the end of December.

Apple is also the most popular stock among "ordinary" millionaire hedge fund managers (see the 10 most popular stocks). The stock gained 45% this year as of March 16. We have been extremely bullish about Apple since we started writing here at Trading Deck at the end of September.

Apple was the most popular stock among hedge funds at the end of September as well. We have been telling you that technology stocks are extremely undervalued as a sector and Apple had single-digit forward PE multiple at the time. Today we are still very optimistic about the stock. Its 2012 forward PE ratio is 13.5 which is still less than the market. This is a stock that is expected to increase its earnings by nearly 20% per year over the next 5 years. It should easily trade above $800 over the next couple of years. Ken Griffin had the largest position in Apple at the end of December.

2. Google (GOOG) is the second most popular stock among billionaire hedge fund managers. The stock had a disappointing performance so far in 2012, down 3.2% as of March 16.

We are optimistic about Google as well. The stock's 2012 forward PE ratio is 17 which is more than 25% higher than that of Apple's. They have similar expected growth rates though. We think Google deserves a slight premium over Apple because it is less exposed to competition from other search engines. This is not a stock that will go up 50% this year but it should deliver healthy returns over the long run.

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SYM TRADE IT LAST %CHG
AAPL $126.37 2.53%
FB $83.20 -0.13%
GOOG $552.03 0.67%
TSLA $190.57 3.01%
YHOO $44.95 -0.33%

Markets

DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

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