Billionaire Kerr Neilson’s Small Cap Picks Include SINA Corp (SINA)

According to the 13F, another Chinese Web portal- Sohu.com Inc (NASDAQ:SOHU)- was another of Neilson’s top small cap picks. Sohu is also in a somewhat questionable business position, going by reported financials: its last quarterly report showed a 22% increase in revenue compared to the fourth quarter of 2011 but a slight decline in net income. The sell-side is counting on strong earnings growth, with Sohu.com Inc (NASDAQ:SOHU) posting trailing and forward P/Es of 24 and 14 respectively, but there’s considerable short interest here as well and we wouldn’t consider the stock a good value.

Platinum disclosed ownership of 6.7 million shares of Ciena Corporation (NASDAQ:CIEN), a provider of communications equipment and software. At a market capitalization of $1.7 billion, the stock trades at 17 times consensus earnings for the fiscal year ending in October 2014. However, Ciena has been struggling with profitability in the past few quarters and sales increased only slightly in its most recent quarter compared to the same period in the previous year. Like some of these other companies we’ve discussed, Ciena Corporation (NASDAQ:CIEN) is a favorite among short sellers.

We’re generally not fans of Platinum’s small cap picks. We have two Chinese Internet companies where growth has recently been low, and earnings multiples have generally been pricing in strong future performance. Foster Wheeler AG (NASDAQ:FWLT) could have some value prospects if it hit Street targets for the forward fiscal year, but given the company’s poor numbers recently it is at best a stock to watch for more information- we’d consider it too speculative to buy on analyst promises alone.

Disclosure: I own no shares of any stocks mentioned in this article.