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By Matt Doiron

Activist and value investor Dan Loeb manages Third Point, a hedge fund with over $4 billion in assets under management. Loeb has been successful enough in investing through either strategy that he has become a billionaire. Earlier this month Third Point filed its 13F for the fourth quarter of 2012, disclosing many of its long equity positions as of the end of December. We think that retail investors can use these picks similarly to the results of a stock screen: review Loeb's favorite stocks and do more research if they seem appealing. Our research has shown that it is possible to outperform the market by as much as 18 percentage points per year by imitating hedge funds' stock picks (read the details here). Here are our thoughts on Third Point's five largest 13F positions by market value (see more of Loeb's stock picks):

At the end of December the fund was still very much long Yahoo! Inc. (NASDAQ:YHOO), though it has reported selling some of its shares recently. Considering Third Point owned over 73 million shares at the beginning of the year, and had seen some gains following its imposition of new CEO Marissa Mayer, we don't think any sale is likely due to bearishness. Yahoo trades at 18 times forward earnings estimates, though some investors argue that it is possible to create shareholder value through selling off parts of the company and so an earnings-based approach might not be appropriate. Tiger Global was buying shares of Yahoo in Q4.

Loeb cut his fund's stake in American International Group, Inc. (NYSE:AIG) but still reported a position of 18.5 million shares. AIG surpassed Apple to become the most popular stock among hedge funds last quarter, according to our database of 13F filings (check out more stocks that hedge funds love). We think that AIG looks like a good value, at a price-to-book ratio of 0.6; while we wouldn't trust AIG's assets enough to value it at the book value of its equity, we think that the discount should be smaller. AIG also carries a current-year P/E multiple of 11, suggesting that the sell-side thinks it is a buy.

Auto parts company Delphi Automotive PLC (NYSE:DLPH) was another of Third Point's top picks. Auto parts companies - along with a number of other auto related stocks - tend to be cheap in terms of their earnings multiples, and many value investors who see strength in autos have been buying them. Specifically, Delphi's trailing P/E is 12 and the five-year PEG ratio, based on analyst expectations of strong growth, is 0.7. However, sales did slip slightly last quarter compared with the fourth quarter of 2011 and earnings were down sharply as a result. It might be worth considering against other cheap stocks tied to autos.

The fund added shares of Murphy Oil Corporation (NYSE:MUR), a $12 billion market cap oil and gas company, for a total of 6.2 million shares at the end of December. Murphy's earnings multiples also look good - its trailing and forward P/Es are 12 and 10 respectively - but that pricing is not out of the ordinary for oil and gas companies with the super majors generally trading about the same level if not even cheaper. Murphy's dividend yield, which is about 2% going by recent quarterly payments, is also not particularly attractive. Loeb has speculated that Murphy could spin out or sell some of its businesses, including its retail gas stations.

Third Point initiated a position of 7 million shares in News Corp (NASDAQ:NWSA). Loeb and his team had actually been involved in the stock during the second quarter of 2012, which is not surprising as the company is set to break into two this year. Breakups, similar to spinouts, often create shareholder value because management can better focus on operations and Loeb is known for his liking of spinout opportunities. Evaluating the stock in its current form doesn't make it look too bad either: analyst consensus for the fiscal year ending in June 2014 generates a forward earnings multiple of 15, in line with other major media companies.

Source: Billionaire Dan Loeb's Top Stock Picks