One of Vinik’s top stock picks was Barrick Gold Corporation (NYSE:ABX), with a position of 2.3 million shares. Barrick’s earnings multiples- 11 on a trailing basis, with earnings growth expected this year- make it considerably cheaper than other gold miners such as Goldcorp Inc. (NYSE:GG). However, the company has not been doing well recently: last quarter revenue was down 14% versus a year earlier, contributing to a 55% decline in net income. Fellow billionaire David Einhorn’s Greenlight Capital owned about 2 million shares (find Einhorn’s stock picks). We think Barrick might be a good alternative to investing directly in gold, though it is of course ultimately dependent on gold prices and that might be too speculative for us.
Foot Locker, Inc. (NYSE:FL) was another top pick as Vinik more than tripled his stake in the footwear retailer. Foot Locker does look like it has value potential- it trades at 13 times trailing earnings but sales were up 9% in its most recent fiscal quarter compared to the same period in the previous fiscal year (earnings grew at a much faster rate, though that is likely not sustainable). AQR Capital Management , which is managed by Cliff Asness, increased its holdings of Foot Locker last quarter as well (check out more stocks Asness was buying). We think that it’s worth taking a closer look at the company.
South Korean telecom company KT Corporation (NYSE:KT) has a market capitalization of $4 billion, which together with sell-side estimates imply a forward P/E of only 8. KT’s recent financial performance has been good, and it too may be worth investigating. We’d note that Vinik, who initiated a position of 1.8 million shares last quarter, also has a position in Korea Electric Power Corporation (NYSE:KEP) so he is likely bullish on South Korea as a whole.
Read on to see a cheap oil company that Vinik likes:
Vinik also liked Hess Corp. (NYSE:HES), with about 550,000 shares in his portfolio at the end of September from zero three months earlier. The oil and gas company- which does have a global exploration and production unit, though it may be better known for its gas stations- carries low multiples as do many other large oil and gas companies. Billionaire Ken Griffin’s Citadel Investment Group was buying Hess last quarter (research more stocks Citadel likes). Interestingly, unlike many of its peers Hess reported higher revenue in the third quarter than in the same period in 2011. It might be a better pick than the more widely followed majors.
Another South Korean telecom company, SK Telecom Co., Ltd. (NYSE:SKM), was yet another new pick in Vinik’s portfolio as he reported owning 2.8 million shares. The stock trades at trailing and forward P/E multiples of 13 and 8, respectively. In this case, the expected improvement in earnings would be a reversal of recent trends as SK Telecom’s net income came in 54% lower last quarter than in Q3 2011. Orbis Investment Management, run by William Gray, was also buying shares and closed September with close to 11 million shares in its portfolio (see more stocks Orbis likes). It might be worth looking at SK, KT, and other Korean stocks to see if these cheap prices do in fact make sense.
