Bruce Kovner is the legendary billionaire trader who founded Caxton Associates, a $20 billion New York-based trading and investment company. He was profiled in the book Market Wizards, by Jack Schwager, who wrote that back in 1989, Kovner had returned more than 80% annually during the prior 10-year period. Kovner has reportedly returned more than 28% annually for the latest 10 years.

Here are a few of his stockholdings with the lowest price/earnings-to-growth ratios.

The Kovner stock with the lowest PEG ratio is Cummins (CMI), which makes and markets diesel and natural gas engines, electric power generation systems and related products. Earnings for the latest quarter increased 32% vs. the same period last year on a 16% increase in revenues. The stock has a P/E of 16, a PEG of 0.68 and a yield of 1%.

Cummins is also owned by the Hancock Horizon Value Trust, a Morningstar-rated five-star fund managed by David Lundgren. The fund has had an average annual return of 18.35% over the last five years. Hancock also owns Precision Castparts (PCP), with a P/E of 13 and a PEG of 0.68; ConocoPhillips (COP), with a PE of 7 and a PEG of 0.44; and Nucor (NUE), with a P/E of 8 and a PEG of 0.88.

Another Kovner stock with a low PEG is Monsanto (MON), the huge agricultural products company. Monsanto recently announced that it will divest its dairy hormone business, due to concerns of retailers about the safety of the product. The stock has a P/E of 31 and a PEG of 0.81, and it pays a yield of 0.9%.

Monsanto is also held by Duquesne Capital, a $4 billion hedge fund founded by Stanley Druckenmiller, who worked for George Soros for many years and helped bring in 30% returns for Soros' Quantum Fund. Duquesne also owns Exelon (EXC), with a P/E of 19 and a PEG of 1.73; VMware (VMW), with a P/E of 57 and a PEG of 1.03; and Genentech (DNA), with a P/E of 34 and a PEG of 1.56.

Allegheny Energy (AYE) is another low PEG stock owned by Kovner. This electric utility, which serves Pennsylvania, West Virginia, Maryland and Virginia, just reported that the Pennsylvania Public Utility Commission has approved the company's request to offer a voluntary wind energy program to its electric customers. The program would allow customers the option to pay an additional charge to buy wind energy credits. The stock has a P/E of 15, a PEG of 0.81 and a yield of 1.3%.

Allegheny is also owned by the Morgan Stanley Utilities Fund, which invests at least 80% of its assets in utility securities. The stock has had an average annual return of 21.43% over the last five years. Morgan Stanley Utilities also owns NRG Energy (NRG), with a P/E of 17 and a PEG of 0.98; PPL (PPL), with a P/E of 14 and a PEG of 1.13; and FPL Group (FPL), with a P/E of 20 and a PEG of 1.58.

To see the rest of Kovner's stocks, check out the Caxton Associates portfolio at Stockpickr.com.

Posted on Aug. 19, 2008