Billionaire Ken Fisher’s Latest Stock Picks
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Fisher Asset Management, which is managed by billionaire investor/author/Forbes columnist Ken Fisher, has released its 13F filing for December 2012, disclosing many of its long equity positions. Investors can use these filings as a way to see which stocks a manager likes or to get a more general impression of how the manager is looking at the markets. We have gone through the filing and picked out five of Fisher’s largest holdings by market value as of the beginning of the year Read on for our quick take on these stocks and compare them to previous filings.
The fund’s top pick was Pfizer (NYSE: PFE) with the fund selling a very small amount of what had been its largest holding three months earlier as well. Pfizer trades at 21 times trailing earnings but Wall Street analysts expect net income to be considerably better this year: the current-year P/E is only 12. This is the case despite double-digit percentage decreases in revenue and earnings in Q3 2011 versus a year earlier. In its most recent 13F filing, Tiger Cub Rob Citrone’s Discovery Capital Management had Pfizer as one of the top holdings in its portfolio. We think that we would wait to see if the company’s financials are actually going to be on target.
Fisher owned 4.9 million shares of Visa (NYSE: V), up slightly from the beginning of October. With Visa gaining in price since that time, it moved into the fund’s top five picks. Visa is another stock where investors have to look ahead: the stock is valued at 19 times consensus earnings for the fiscal year ending in September 2014. Revenue and earnings have been up, and we like the credit card business’s exposure to payment volumes (as opposed to credit risk which is held by banks), but we think we’d avoid Visa at that multiple. Billionaire Stephen Mandel’s Lone Pine Capital owned 2.9 million shares at the end of the third quarter (check out Mandel's stock picks).
Johnson & Johnson (NYSE: JNJ) was another of Fisher’s favorite stocks with the fund reporting a position of over 10 million shares- down slightly from the fund’s 13F for the third quarter of the year. In our recent analysis of Johnson & Johnson, we thought that it too was too dependent on seeing future growth for us to recommend buying: its trailing P/E is 24 and the business has been struggling recently. There was an abnormal increase in research and development, but even accounting for that the growth rate in pretax income was very light.
Cisco Systems (NASDAQ: CSCO) remained one of Fisher’s top picks as well. Cisco, which made our list of the ten most popular tech stocks among hedge funds in the third quarter (see the full top ten list), is considerably cheaper than peers in the networking and communications business: its trailing P/E multiple for example, is only 13. We’d also note that in its most recent fiscal quarter (which ended in October), earnings were up 18% compared to the same period in the previous fiscal year, with revenue growth being more modest but still a respectable 6%. We think it’s worth doing more research on the company.
Fisher also liked Oracle (NYSE: ORCL), with a position of almost 20 million shares as the fund entered 2013. Oracle is another stock with good recent earnings growth, and it carries trailing and forward P/Es of 16 and 12 respectively. Renaissance Technologies, whose founder Jim Simons is now a billionaire, initiated a position in Oracle during the third quarter and the company actually made the top ten tech stocks list as well. The software company could be another potential value pick if it continues its earnings growth.
This article is written by Matt Doiron and edited by Meena Krishnamsetty. They don't own shares in any of the stocks mentioned in this article. The Motley Fool recommends Cisco Systems, Johnson & Johnson, and Visa. The Motley Fool owns shares of Johnson & Johnson and Oracle.. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!