Top Stock Picks of Six Billionaire Investors

Once a quarter, certain extremely large investors have to make public to the Securities and Exchange Commission what their holdings in stocks and other securities are. For the rest of us, it's a good time to see what the really smart money has been doing.

Those disclosures were filed Monday for the third quarter, and The Wall Street Journal took the opportunity to pore through the SEC filings of six of the greatest investors on the planet. Once those six have taken big positions, they're probably delighted to share the news of their holdings with the rest of the world. After all, they can only hope that small investors will see the wisdom of these picks and pile in -- thus further boosting the value of their investments. But the real question that investors need to ask is which of these holdings still has further to rise.

I looked at the stocks The Wall Street Journal highlighted from those 13-F filings, which track the investments of those with over $100 million under management. I focused in on the ones with the lowest Price/Earnings to Growth (PEG) ratios – thus picking the ones that trade at the lowest price relative to their expected earnings growth. If these companies deliver on their promise, I think they have the furthest to rise and could still be good investments.

Without further ado, here are the best picks from the current holdings of six of the world's top investors:

John Paulson
Paulson's best pick is Genzyme (GENZ) which sports a PEG of 0.12 -- and in my opinion, anything less than 1.0 is cheap. Genzyme trades at a forward P/E of 20 and its earnings per share are expected to grow 169% to $3.45 in 2011. It's also the target of a hostile takeover attempt by Sanofi Aventis (SNY). But this stock has risen 42% in the last year, so it's hardly undiscovered. Still, my hunch is that if Genzyme achieves the rapid earnings growth that analysts expect, it will do fine whether it gets taken over or not.

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Warren Buffett
Buffett has a good thing going with long-time holding Wells Fargo (WFC). It looks quite inexpensive at a PEG of 0.59. Its P/E is 16.5 and its earnings are expected to grow 28% to $2.81 in 2011. The stock has been flat over the last year and it pays a dividend yield of 0.72%.

George Soros
Soros's picks are not as well-priced now as those of Paulson or Buffett, but his stake in AT&T (T) is a good bargain at a PEG of 0.91. AT&T trades at a P/E of 8.1 and its earnings are expected to grow 8.9% to $2.49 in 2011. The stock, which pays a whopping 5.87% dividend yield is up 9.1% in the last year.

David Einhorn
Einhorn's cheapest pick is Transatlantic Holdings (TRH), a property-casualty reinsurance company, that sports a PEG of 0.57 on a P/E of 8.5 with earnings expected to grow 15% to $6.24 in 2011. The stock is down 5.5% in the last year and yields 1.62%.

Carl Icahn
Takeover artist Icahn has a big stake in a company that's trading very cheaply if it's going to achieve its earnings growth forecast. That pick is Masco (MAS), a maker of home products like faucets and windows. It's trading at a PEG of 0.28, and its forward P/E of 22 is a small fraction of its 79% earnings growth to $0.50 in 2011. The stock has lost 20% of its value in the last year and its dividend yield is 1.97%.

Bill Ackman
Ackman's picks are not overly cheap, but of the ones disclosed in his 13-F, I like Fortune Brands (FO): It trades at a reasonable price and has put in a strong recent performance. Specifically, Fortune's PEG of 0.97 is based on a P/E of 21.3 on earnings forecast to grow 21.9% fo $3.40 in 2011. The stock has risen 41% in the last year and it yields 1.33%.

Of these six, I'd pick Wells Fargo as the safest bet and Genzyme as the riskiest.