Editor’s Note: Related tickers: Apple Inc. (NASDAQ:AAPL), Goldman Sachs Group, Inc. (NYSE:GS), Lennar Corporation (NYSE:LEN), Google Inc (NASDAQ:GOOG), eBay Inc (NASDAQ:EBAY), Toll Brothers Inc (NYSE:TOL)
Mark Asset Management was founded by Morris Mark in 1986 and grew to around $2 billion under management around the time of the tech bubble. After many of his initial investors withdrew their money from the fund, Mark resumed a low profile and has only just begun a fundraising initiative designed to grow assets under management. Before founding his hedge fund, Mark had worked under Leon Cooperman at Goldman Sachs Group, Inc. (NYSE:GS).
Mark Asset Management recently filed its quarterly 13F filing, disclosing many of its long equity positions as of the end of March. This quarter we will begin tracking its filings alongside those of hundreds of other hedge funds and notable investors in our database, which we use to develop investing strategies. We have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about imitating small cap picks). Read on for our quick take on Mark’s five largest holdings or see the full list of stocks from the 13F.
The largest holding in Mark’s portfolio was Apple Inc. (NASDAQ:AAPL), as the fund disclosed ownership of about 40,000 shares. Apple Inc. (NASDAQ:AAPL) had lost its place as the most popular stock among hedge funds during the fourth quarter of 2012 to AIG (find more of hedge funds’ favorite stocks), and during the first quarter of 2013 its earnings fell 18% versus a year earlier. The stock does trade at only 11 times trailing earnings (and that’s not taking into account the sizable cash hoard) and so Apple Inc. (NASDAQ:AAPL) could be a good value if it is able to stabilize its business.
Image: Apple Inc. (NASDAQ:AAPL)
According to the 13F, Mark owned close to 420,000 shares of Lennar Corporation (NYSE:LEN) at the beginning of April. Homebuilders have done well in the market as housing data continues to be good, and the stock price is up 51% in the last year accompanying high growth on both top and bottom lines. However, a number of market players are bearish on Lennar Corporation (NYSE:LEN) as shown by the fact that 23% of the float is held short. The stock’s beta of 1.8 demonstrates how sensitive homebuilders are to general economic conditions.
Mark and his team had about 20,000 shares of Google Inc (NASDAQ:GOOG) in their portfolio at the end of Q1. Google Inc (NASDAQ:GOOG) has been another growth stock, with the company reporting 16% earnings growth in its most recent quarter compared to the same period in the previous year; net income is increasing as the company integrates Motorola Mobility Holdings and the general search business grows. However, current prices already include substantial future growth as shown by the trailing P/E of 26.
Who’s the best of the rest?
The filing reported a position of just over 250,000 shares in eBay Inc (NASDAQ:EBAY). The stock carries trailing and forward earnings multiples of 26 and 17, respectively, as the financial community is expecting strong growth from eBay Inc (NASDAQ:EBAY)’s two business units- marketplaces and payments (eBay Inc (NASDAQ:EBAY)’s payments business includes PayPal)- as well. Last quarter the company’s revenue rose 14% compared to the first quarter of 2012, and margins expanded slightly with the result being a 19% increase in net income.
Toll Brothers Inc (NYSE:TOL) rounds out our list of Mark’s five largest holdings from the end of March. Just as with Lennar Corporation (NYSE:LEN), business has been doing well at Toll Brothers Inc (NYSE:TOL) recently and revenue rose over 30% in its last quarterly report compared to a year ago. Investors are getting a bit aggressive on this company as well, and in fact it is valued at 25 times consensus earnings for the fiscal year ending in October 2014; that valuation is probably too high for us to recommend buying the stock.
These look to be some generally bullish picks from Mark Asset Management. The housing companies have been doing well but we’d certainly advise investors against becoming too exposed to the overall economy. Similarly, we like Google Inc (NASDAQ:GOOG) and eBay Inc (NASDAQ:EBAY)’s growth prospects but aren’t convinced that current prices don’t already account for much of the expected upside. Apple Inc. (NASDAQ:AAPL) could very well be a value play, though the company would need to halt the decline in its earnings.
Disclosure: I own no shares of any stocks mentioned in this article.
