Occidental, Capital One, and More: Billionaire Israel Englander’s Cheap Stock Picks

Millennium Management was founded in 1989 and has since grown to $13 billion in assets under management. Founder Israel Englander has become a billionaire due to the fund’s ability to succeed even as its size has increased. We have gone through the fund’s recent 13F filings and picked out stocks whose valuations are cheap in relation to their earnings (see the full list of Millennium’s top stock picks). While there’s often a good reason why the market is sour on value stocks, looking at low priced companies can be a good screen to find prospects for future research. Here are the five largest stock positions by market value in Millennium’s 13F portfolio which have trailing and forward price-to-earnings multiples of 12 or lower:

The fund’s position of about 870,000 shares in Occidental Petroleum Corporation (NYSE:OXY) made it one of the five largest 13F holdings by market value. Occidental, a $60 billion market cap oil and gas company, trades at 10 times earnings whether we consider its historical results or analyst consensus for 2013. The company reported a 22% decline in net income in its most recent quarter compared to the same period in 2011. Fellow billionaire David Shaw’s D.E. Shaw added shares of Occidental during the third quarter of 2012, closing September with 2.1 million shares in its portfolio (check out D.E. Shaw’s favorite stocks). We think that we’d prefer to look at other large oil companies such as Exxon Mobil or BP.

Englander and his team cut their stake in Marathon Oil Corporation (NYSE:MRO) by 17% but still reported owning 2.2 million shares in the 13F. Marathon is another oil and gas company whose activities include exploration and production (including producing oil from the Alberta oil sands) as well as refining and marketing. It reported double-digit increases in both revenue and earnings for the third quarter over its numbers from Q3 2011, and is expected to continue growing next year. At a trailing P/E of 12, it is well priced if it can actually deliver that growth.