Maverick Capital Stock Picks With The Highest Upside Potential

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 |  Includes: AAPL, C, CHTR, CI, CTSH, CTXS, DG, GLW, JPM, M, MCK, NTAP, NWSA, ORCL, PFE, PGR, QCOM, USB, WFC
by: Insider Monkey

Lee Ainslie is one of the oldest tiger cubs. He met Julian Robertson when he was managing $700 million with seven other analysts. He joined Tiger in 1990 and spent three years there. Later he launched his own hedge fund, Maverick Capital, in 1993.

Ainslie has beaten the S&P 500 index on average by about 6-7 percentage points per year, with 50% less volatility, since its inception. Our research has shown that by focusing on stock picks of successful hedge funds like Maverick Capital, investors are more likely to beat the market.

Below is a list of Maverick Capital’s stock picks with high upside potential. All companies have at least $10 billion market cap, analyst recommendation scores of lower than 2.5 (1=strong buy, 5=strong sell), and Maverick invested at least $100 million in these positions.

Company Name

Ticker

Value

Activity

Analyst Score

QUALCOMM

QCOM

327633

-9%

1.9

CORNING INC

GLW

323319

12%

2.2

MCKESSON

MCK

322247

New

2

WELLS FARGO

WFC

284274

New

2

PROGRESSIVE CORP

PGR

220111

-6%

2.3

NETAPP INC

NTAP

217162

141%

2.2

CITRIX SYSTEMS INC

CTXS

213277

New

2.4

JPMORGAN CHASE

JPM

211011

-35%

1.8

TIME WARNER CABLE

TWC

184705

-18%

2

APPLE INC

AAPL

181127

-62%

1.7

ORACLE CORP

ORCL

179013

-26%

1.8

CITIGROUP INC

C

178499

-35%

2.3

NEWS CORP

NWSA

160469

31%

2.1

U S BANCORP DEL

USB

146293

New

2.1

DOLLAR GENERAL

DG

141772

-34%

2

COGNIZANT

CTSH

112791

New

1.8

PFIZER INC

PFE

111785

-68%

1.9

CIGNA CORP

CI

108858

-3%

2

MACYS INC

M

107701

New

2

Click to enlarge

During the third quarter, Maverick Capital initiated a brand new $284 million position in Wells Fargo & Co (NYSE:WFC). The average analyst recommendation score for WFC is 2. The stock returned 12.04% since the end of September, versus 10.45% for SPY during the same period. WFC has a market cap of $142B and a P/E ratio of 9.96. Billionaire Warren Buffett is also bullish about WFC. At the end of the third quarter, his Berkshire Hathaway had $8.7 billion invested in WFC.

Another mega-cap financial stock with high upside potential that Ainslie loves is JPMorgan Chase & Co (NYSE:JPM). It has an average analyst recommendation score of 1.8 and returned 8.24% so far in the fourth quarter. JPM has a market cap of $122.81B and a P/E ratio of 6.89. John Paulson’s Paulson & Co. also had $173 million in JPM at the end of September.

Apple Inc (NASDAQ:AAPL) and Oracle Corp (NASDAQ:ORCL) are two mega-cap technology stocks in Maverick Capital’s portfolio. They also have high upside potential. The average analyst recommendation score for AAPL is only 1.7, the lowest among the stocks listed above. ORCL’s recommendation score is also low: 1.8. AAPL has a market cap of $268B and a P/E ratio of 14.63. ORCL’s market cap is $130B and its P/E ratio is 14.64. Both stocks are very popular among hedge funds. Among the 350 hedge funds we are tracking there were 125 hedge funds with AAPL positions and 53 with ORCL positions at the end of September.

Other stocks with high upside potential that Ainslie is bullish about include Cognizant Technology Solutions Corp (NASDAQ:CTSH), Qualcomm Inc (NASDAQ:QCOM), Pfizer Inc (NYSE:PFE), and Las Vegas Sands Corp (NYSE:LVS). We like Ainslie. During the past 10 years, he only underperformed the market 3 times: in 2003, 2005 and 2009. And in all three cases, the worse-than-market performances were due to his short positions. So we think his long positions are relatively safe to invest in and we really like his positions with high upside potential. We strongly recommend investors to do in-depth research on these stocks for their own portfolio.

Disclosure: I am long C.