Billionaire Ken Fisher Cut these Stock Positions by more than 20%

By Meena Krishnamsetty - March 1, 2012 | Tickers: SAN, GE, HAL, NTAP, WFC | 0 Comments

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Ken Fisher’s Fisher Asset Management reported a portfolio value of $33.50 billion at the end of December 2011, up from $30.56 billion at the end of September. The firm made significant changes to several of its existing positions. Here we compiled a list of stock positions that were cut by more than 20% in Fisher’s portfolio during the fourth quarter 2011.

Ken Fisher cut his Banco Santander SA (NYSE: SAN) position by 31% during the fourth quarter. He had a $232 million position at the end of the third quarter, which was 7.6 times bigger than Jim Simons’ position during Q3. After the reduction, Fisher still had $150.8 million invested in the stock. The Spanish financial group was hammered in 2011 due to the European debt crisis because the company’s subsidiaries are closely tied to the European banking system. Recently Fitch also downgraded Banco Santander’s subsidiaries in Latin America. This is a very risky stock, but we like the high dividend yield and low forward PE ratio of 7.19. However, we only recommend a small position for investors who don’t mind the risk.

Fisher also cut his position in General Electric Co. (NYSE: GE) by 30% over the fourth quarter, moving from more than 31 million shares at the end of September to 22 million shares at the end of the year. General Electric is expected to grow its earnings by around 12% over the next five years. Barring another recession GE’s 2014 forward PE is very likely to be below 10. We believe GE is undervalued because the company has an exposure to the financial sector via GE Capital. Moreover, it seems GE’s effort in utilizing green energy was also undervalued by the market. We are cautiously optimistic about the stock.

Fisher cut a sizable portion of his stake in NetApp Inc. (NASDAQ: NTAP), from 5.6 million shares at the end of September to 4.1 million shares at the end of December. Fisher picked NTAP during the first quarter of 2011, when he initiated a position of 5.2 million shares. It’s possible that he lost a lot in NTAP because the stock was trading above $50 per share in Q1, while it was priced at less than $40 in Q4. We don’t recommend NTAP as we think the stock isn’t cheap. It has a forward PE of 23.8 but expected to grow its earnings by only 15% annually over the next five years. There are faster growing tech stocks trading at much lower forward PE ratios.

Wells Fargo & Co (NYSE: WFC) is another financial position that was cut by more than 20% in Fisher’s portfolio. Wells Fargo is the ninth most popular stock among hedge funds (see 10 most popular stocks). The stock’s low forward PE ratio is the main reason behind this interest. Warren Buffett took advantage and bought 22 million shares of the bank even though he had more than $10 billion invested already (see Warren Buffett’s portfolio).   

Fisher also cut his stakes in oil stocks like Halliburton (NYSE: HAL) and Exxon Mobil (XOM). We don’t think it’s a good idea to reduce our exposure to financials and energy stocks. Halliburton's forward PE ratio is less than 10 and it is expected to increase its earnings by 13% annually. This is very cheap compared to Schlumberger (SLB). On the other hand, we approve Fisher's NTAP move. It is a speculative play and investors should avoid it. 

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