In this article, we discuss 10 small-cap stocks to buy according to Ken Fisher. If you want to skip our detailed analysis of Fisher Asset Management’s philosophy, hedge fund returns, and history, go directly to 5 Small-Cap Stocks to Buy According to Ken Fisher.
Small-cap stocks are companies with a market capitalization of between $300 million and $2 billion. In a landmark study, Nobel laureate Eugene Fama and co-author Ken French examined the equity returns of small, mid, and large-cap companies from 1926 to 2018. They found that the annual return rate of small-cap companies was 1.9% greater than large-cap companies. However, the small-cap equities had a 30.8% risk factor compared to 17.9% with large-cap equities.
Kenneth Fisher is one of the world’s most refined and polished investment gurus. His investment management firm, Fisher Asset Management, has a diverse portfolio including small to large-cap growth and value stocks. Till the 1980s, small-cap value stocks didn’t fall into any investment category. Ken Fisher’s firm was one of the first investment management companies to offer small-cap value stocks to its clients. Fisher respects and values all types of companies, as he once said:
“Both cheap value stocks and more glamorous growth stocks can work well in a portfolio – if done right.”
Kenneth Lawrence Fisher is the son of Philip A. Fisher, a renowned stock investor. He followed in his father’s footsteps in joining the financial market. His firm began with a modest amount of $250 and reached a market value of $169.494 billion in the first quarter of 2022.
According to Fisher Asset Management’s Q1 2022 13F filings, Fisher made 99 new stock purchases and increased holdings in 442 of his previous stocks. Moreover, he sold out of 89 stocks and reduced holdings in 385 stocks.
While Ken Fisher owns prominent names like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), in this article, we discuss some of the star small-cap companies in Fisher Asset Management’s portfolio.
Our Methodology
These stocks have been picked from Fisher Asset Management’s first-quarter 2022 13F portfolio. All of the stocks mentioned in the article have a market capitalization of less than $2 billion. The stocks are mentioned in ascending order, depending on their position in Fisher Asset Management’s portfolio.
For a better understanding of the readers, analyst estimates, ratings, earnings, as well as the latest news is mentioned for these stocks.
Small-Cap Stocks to Buy According to Ken Fisher
10. Veracyte, Inc. (NASDAQ:VCYT)
Fisher Asset Management’s Stake Value: $31.656 million
Percentage of Fisher Asset Management’s Portfolio: 0.01%
Market Cap as of June 16: $1.198 billion
Veracyte, Inc. (NASDAQ:VCYT) is a San Francisco-based biotechnology company that provides genomic diagnostic services and products. According to first-quarter 13F filings, Fisher Asset Management held 1.148 million company shares worth $31.656 million. Veracyte, Inc. (NASDAQ:VCYT) covers 0.01% of the company’s portfolio. On June 10, Veracyte, Inc. (NASDAQ:VCYT) CEO Marc Stapley bought 60,000 shares worth $979,800 at $16.33 per share. This brings Stapley’s total ownership value to approximately $2.6 million with 159,761 shares.
On May 4, Needham analyst Mike Matson Veracyte, Inc. (NASDAQ:VCYT) maintained a Buy rating on the company shares after lowering the price target to $26 from $31. The analyst believes that the company has the potential to become one of the leading cancer diagnostic companies.
Veracyte, Inc. (NASDAQ:VCYT), in addition to Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), is one of the most significant stocks to buy according to Ken Fisher.
Artisan Partners mentioned in its second-quarter 2021 investor letter. Veracyte, Inc. (NASDAQ:VCYT). Here is what it said:
“Among our bottom contributors (includes) Veracyte. Veracyte develops and markets molecular tests designed to minimize ambiguity in the treatment of patients with cancer. These tests can reduce unnecessary surgeries and help put cancer patients at ease when the decision is to “watch and wait.” Shares have been pressured amid a recent investment cycle (acquired Decipher and HalioDX) and a resurgence of the pandemic earlier this year weighing on testing volumes. In addition, the company’s founder and CEO recently announced she was moving to Executive Chair. Her replacement is the former CFO of Illumina, who is very knowledgeable in in-vitro diagnostics and played a critical role in Illumina’s international expansion efforts (which we expect him to pursue at Veracyte). We are maintaining our position as patients return to the clinic for testing and as management executes on its strong R&D pipeline, including the upcoming launch of a nasal swab lung cancer test. Longer-term, the company is well-positioned to expand internationally as it ports its growing menu of tests onto the recently acquired nCounter instrument.”
9. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)
Fisher Asset Management’s Stake Value: $32.54 million
Percentage of Fisher Asset Management’s Portfolio: 0.01%
Market Cap as of June 16: $1.78 billion
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) outsources aircraft and aviation operating services. The first-quarter 2022 earnings reports of the company show that Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) outperformed the EPS estimates by $0.36 at $2.99.
In February 2022, Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)’s board of directors approved a share repurchase program of up to $200 million. 1.2 million shares worth $100 million were repurchased in April under the accelerated share repurchase program. Moreover, the company used $115 million in pre-delivery payments for their new aircraft. Due to these decisions, Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)’s cash and cash equivalents were at $740.9 million as of March 2022, compared to $921 million at the end of December 2021.
Out of the 912 hedge funds tracked by Insider Monkey, Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) was part of 36 public hedge fund portfolios in the first quarter of 2022. In the previous quarter, 35 hedge funds had a stake in the company. Herbert Frazier’s Hill City Capital had the most significant stake in the company in Q1 2022, with 1.4 million shares worth $123.878 million.
Here is what Greenlight Capital had to say about Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) in its second-quarter 2021 investor letter:
“Air Freight COVID caused a dramatic reduction in passenger aviation. Passenger planes often carry freight in their bellies. With planes grounded, capacity came out of the industry. At the same time, freight demand expanded both due to the recovering economy and growing eCommerce, which often emphasizes air shipments. While there has been some recovery in passenger aviation, airlines are emphasizing narrow-body planes, which carry less freight than wide-body planes. Compared to 2019, current air freight demand is about 10% higher, and capacity is about 10% lower. The result is that cargo rates have exploded.
Supply will be slow to come online. Some passenger planes are being converted to freighters, but conversion capacity for wide bodies is limited, and the aggregate impact of this will be modest. Meanwhile, air freight companies trade at tiny multiples of what investors assume to be peak profits. The implied cost of equity is quite high, which makes it difficult to justify adding assets. As a result, air freight companies are in no rush to order new planes; in any case, new orders would take several years to build. The result is rates and profits are likely to be higher than expected for quite some time.
We own Atlas Air Worldwide (AAWW), which is poised to benefit. It trades at around 5x this year’s consensus earnings estimates.”
8. Dynavax Technologies Corporation (NASDAQ:DVAX)
Fisher Asset Management’s Stake Value: $32.54 million
Percentage of Fisher Asset Management’s Portfolio: 0.01%
Market Cap as of June 16: $1.78 billion
Dynavax Technologies Corporation (NASDAQ:DVAX) is a biopharmaceutical company that focuses on developing and commercializing novel vaccines. In the last 12 months, the company’s stock has been up by 11.34%.
According to the Insider Monkey database, 22 hedge funds were bullish on Dynavax Technologies Corporation (NASDAQ:DVAX). The funds had a combined stake value of $191.398 million. Christopher Medlock James’ Partner Fund Management held the most significant stake with 3.8 million shares worth $41.25 million, making up 1.54% of the fund’s portfolio.
According to Zacks Investment Research, Dynavax Technologies Corporation (NASDAQ:DVAX) expects to make $146.7 million in sales in the second quarter of 2022. In the same quarter of the previous year, the company posted $52.77 million in sales, which shows that it is expected to achieve a 178% YoY growth. Moreover, for 2022, Zacks estimates $653.1 million in sales for the whole year.
7. Vericel Corporation (NASDAQ:VCEL)
Fisher Asset Management’s Stake Value: $46.786 million
Percentage of Fisher Asset Management’s Portfolio: 0.02%
Market Cap as of June 16: $1.252 billion
Vericel Corporation (NASDAQ:VCEL) is a Massachusetts-based biopharmaceutical company. Fisher Asset Management was the most prominent name among hedge funds in the company’s profile in the first quarter of 2022. The fund owned shares worth $46.786 million of Vericel Corporation (NASDAQ:VCEL), representing 0.02% of the 13F portfolio.
In the first quarter of 2022, Vericel Corporation (NASDAQ:VCEL) reported a revenue of $36.07 million, beating the analyst estimates of $34.31 million by 5.16%. However, the company reported a loss per share of $0.15, missing analyst estimates of a per share loss of $0.12.
6. Knowles Corporation (NYSE:KN)
Fisher Asset Management’s Stake Value: $51.779 million
Percentage of Fisher Asset Management’s Portfolio: 0.03%
Market Cap as of June 16: $1.575 billion
Knowles Corporation (NYSE:KN) is a supplier of micro-acoustic, audio processing, and precision device solutions for various markets. The company has locations in North America, Europe, and Asia. On April 28, the board of directors at Knowles Corporation (NYSE:KN) announced a $150 million share repurchase program in the second quarter of 2022.
According to the first quarter 2022 earnings report, Knowles Corporation (NYSE:KN) posted an EPS of $0.35, which is 15.3% above analyst consensus. The company exceeded the revenue estimates of $200.18 million by $1.22 million. In addition, the company reported $83.3 million in gross profit compared to $78 million in the same quarter of 2021.
The Insider Monkey database shows that 23 hedge funds were bullish on Knowles Corporation (NYSE:KN) in the first quarter of 2022. Ariel Investments had the most significant stake in the company, with 2.78 million shares worth $59.9 million. The fund reduced its holding by 2% in the first quarter of 2022 compared to the previous quarter.
Apart from Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN), Knowles Corporation (NYSE:KN) is one of the notable stocks to invest in according to Ken Fisher.
Here is what Heartland Advisors had to say about Knowles Corporation (NYSE:KN) in its fourth-quarter 2021 investor letter:
“Good to hear. The Fund’s Information Technology (IT) holdings posted a strong quarter and outperformed the benchmark average. Knowles Corp. (KN) is an example of the type of compelling opportunity we hold in the space. The company is a leading maker of microphones, speakers for cell phones and other electronics, and hearing aids. Earnings have recently come in higher than expected, and management upped their guidance led by growth in the company’s high-margin precision device segment. Additionally, the company announced it was redeeming convertible debt using cash it had on its balance sheet—clearing up an issue that had hung over the stock.
We view the recent strong quarter as a sign of positive things to come for Knowles. Despite the strong performance, shares of the business trade at just 8x estimated 2022 earnings before interest, taxes, depreciation, and amortization.”
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Disclosure: None. 10 Small-Cap Stocks to Buy According to Ken Fisher is originally published on Insider Monkey.
