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Eric Mindich, founder of Eton Park Capital Management, used to work at Goldman Sachs. He was the leader of the equities risk arbitrage group and he also managed the equities division of Goldman. He became a partner at Goldman when he was 27 years old, making him the youngest partner in the history of Goldman. After spending 15 years at Goldman, Mindich started his own hedge fund Eton Park Capital Management in 2004. Under his management, the fund tripled its size in only seven years.

In this article, we are going to focus on Mindich’s stock picks with high upside potential. All companies have at least a $10 billion market cap and analyst recommendation scores lower than 2.5 (5=strong sell, 4=sell, 3=hold, 2=buy, 1=strong buy). The market data is sourced from Finviz.

Company Name

Ticker

Value

Activity

Analyst Recom

NEWS CORP

NWSA

400673

New

2.1

NIELSEN HOLDINGS

NLSN

312960

0%

2

MORGAN STANLEY

MS

310500

53%

2.4

EBAY INC

EBAY

272783

106%

2.2

WILLIAMS COS

WMB

231088

103%

1.9

APPLE INC

AAPL

228708

20%

1.7

MEDCO HEALTH SOLUTIONS INC

MHS

148126

New

2.3

CITIGROUP INC

C

121823

1485%

2.3

EL PASO CORP

EP

96664

0%

2.3

JPMORGAN CHASE

JPM

72649

-71%

1.8

COMCAST CORP

CMCSA

58957

New

2

PFIZER INC

PFE

53117

0%

1.8

During the third quarter, Eton Park initiated a brand new $400 million-plus position in News Corp. The stock has a market cap of $45.9B and a P/E ratio of 16.27. The analyst recommendation score for NWSA is 2.1. Since the end of September, NWSA returned 17.70%, versus 13.57% for SPY in the same period. Besides Eton Park, many other hedge funds also have NWSA in their portfolios at the end of the third quarter. For example, Stephen Mandel’s Lone Pine Capital has $400 million-plus invested in this stock.

Apple has the lowest analyst recommendation score among the stocks listed above. As of September 30, Eton Park invested $229 million in AAPL, up 20% from the end of June. AAPL has a market cap of $384B and a P/E ratio of 14.94. It returned 8.42% since the end of the third quarter, lower than the 13.57% return of SPY. Despite that, AAPL is very popular among hedge funds. There are 125 hedge funds with AAPL positions at the end of September, including Stephen Mandel’s Lone Pine Capital and Chase Coleman’s Tiger Global Management LLC. Such popularity, together with its low analyst recommendation score, indicates that AAPL has great potential to grow in the future.

Two other mega-cap stocks with high upside potential that Mindich is bullish about is JPMorgan Chase & Co. and Pfizer. At the end of September, Eton Park disclosed to own $73 million of JPM and $53 million of PFE. Both stocks outperformed the market since the end of September. JPM returned 17.91% and PFE gained 24.40% in that period. Lee Ainslie is also bullish about both stocks. At the end of the third quarter, Ainslie’s Maverick Capital had $200 million-plus invested in JPM and $100 million-plus invested in PFE.

We like Mindich. Thanks to his strong performance, Eton Park’s AUM grew from $3 billion at inception to around $10 billion today. We believe that by focusing on the top stocks picks of Mindich, especially those with high upside potential, investors are more likely to outperform the market in the long term.

Source: Eton Park Capital's Stock Picks With High Upside Potential