Billionaire Ken Fisher Is Increasing His Position In These Stocks

Gayatri is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Fisher Investments is a Woodside, California-based investment advisory and hedge fund management firm founded by billionaire Ken Fisher. The firm recently filed its 13F form for the quarter ended Sept. 30. I discussed the firm’s new buys in a previous article, but in addition to new buys, it is also interesting to have a look at the stocks in which Fisher Investment is increasing its positions. The following is a list of three top stocks in which Fisher Investments increased its position.

<table> <tbody> <tr> <td> <p>Company Name</p> </td> <td> <p>Shares Bought Last Quarter</p> </td> <td> <p>Shares Held as of Sept. 30, 2012</p> </td> </tr> <tr> <td> <p><strong>Taiwan Semiconductor Mfg. Co. Ltd. <br /> </strong><span class="ticker" data-id="205813">(NYSE: <a href="">TSM</a>)</span></p> </td> <td> <p>21,702,526</p> </td> <td> <p>33,402,757</p> </td> </tr> <tr> <td> <p><strong>Cisco Systems, Inc.</strong><br /> <span class="ticker" data-id="203219">(NASDAQ: <a href="">CSCO</a>)</span></p> </td> <td> <p>16,438,611</p> </td> <td> <p>37,784,052</p> </td> </tr> <tr> <td> <p><strong>Pfizer Inc.</strong><br /> <span class="ticker" data-id="204972">(NYSE: <a href="">PFE</a>)</span></p> </td> <td> <p>9,883,598</p> </td> <td> <p>32,041,849</p> </td> </tr> </tbody> </table>

Here’s a look at these stocks in detail.

Taiwan Semiconductor

Goldman Sachs recently upgraded Taiwan Semiconductors to Conviction Buy.  According to its analysts, market share and scale are becoming increasingly important in advanced semiconductor markets, and Intel, Samsung and Taiwan Semiconductor are the only three major players left in this market. TSMC is likely to gain market share with its industry-leading capex. The company will also benefit from conflict of interest between Apple and Samsung. Apple is likely to move its AP wafers purchases from Samsung LSI to Taiwan Semiconductor. In addition to upside from new business from Apple, the company will also benefit from its ARM CPU and 3D packaging business. The stock is trading at 15x its forward earnings, which I don’t believe is costly given these growth drivers. 


Cisco is trading at a forward P/E of 8.09. Its expected EPS for the current year is 1.94, and next year it's 2.08, and the company is expected to post top line growth of 5.80% in the next two years. Cisco is an interesting capital return story. Cisco announced its commitment to return minimum 50% future FCF to shareholders in August. Cisco currently has ~12% FCF yield and a 3% dividend yield. Although the company is seeing some weakness from slowing macros due to its global exposure, it is making efforts to increase its recurring software and services revenue streams, which are more macro resilient.

Cisco is also well-placed to benefit from growth in data center with its switching and UCS server products. The company’s expected growth rate of 5-6% and 60% gross margin makes it a good buy. The company has $2.66 in cash per share and its P/E ratio is less than the large cap tech average. At these low valuations, I believe macro slowdown concerns are already priced into the stock. Hence, I believe the company is a good buy.


Pfizer recently got approval of the 5 mg dose of its drug Tofacitinib (Xeljanz). The drug is likely to be a blockbuster and bring in over $1 billion annual revenues at its peak. Going forward, the company’s drugs Eliquis and Prevnar -13 are lined up for approval in the first half of next year, and these new launches should help drive the company’s top line. Pfizer is trading at an attractive valuation of just 10.46x, which is a discount to the large cap pharma average, and the company has a dividend yield of 3.60%. I believe the stock is currently a good buy for value investors.

To sum up, Taiwan Semiconductor’s market share prospects makes it a good buy, while Cisco’s new product launches and capital return potential makes it interesting. Pfizer is also a good buy given its compelling valuations and strong drug pipeline.

GayatriSharma has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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