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Chevron Corporation (NYSE:CVX), Merck & Co., Inc. (NYSE:MRK), and The Procter & Gamble Company (NYSE:PG) are some of the longest-term holdings of billionaire money manager Ken Fisher, who has owned shares of each of them since at least early 1999.
Fisher Investments was founded in 1979 by iconic investor, author, and financial analyst Ken Fisher, who has grown the firm from its meager beginnings to more than $209 billion in assets under management as of April 2022. Fisher’s personal net worth is estimated at $4.9 billion as of June 2022.
Fisher Investments utilizes a broad array of tools and metrics to guide its investment decisions, taking both a qualitative and quantitative approach to understanding stocks and broader market conditions. The latter is extremely important to the fund given its top-down approach to investing, which emphasizes understanding the economic landscape first before considering which stocks are likely to make good additions to clients’ portfolios.
In the first quarter, the firm sold off off 89 of its former holdings, while adding 99 new positions to its 13F portfolio. The market value of Fisher’s 13F portfolio stood at over $169 billion, down from nearly $179 billion at the end of 2021.
The firm remained more heavily invested in tech stocks than any other sector, as it has been for the past eight consecutive quarters. Tech stocks accounted for over 29% of the value of its 13F portfolio holdings. Fisher Investments also had greater than 10% exposure to several other sectors, including communications, healthcare, finance, and consumer discretionary.
Fisher Investments has been extremely successful over an extended timeline, as evidenced by a 2015 study of the fund’s performance by Forbes, which estimated that Fisher Investments had beaten the market by an average of 4.2 percentage points annually over the last 18 years.
A few dozen stocks have remained stalwart members of the firm’s portfolio throughout that entire period and continuing through to the present day. Fisher has held those stocks since at least the first quarter of 1999, which is as far back as the SEC’s online database of 13F filings goes.
In this article we’ll take a look at ten of the select group of stocks that have graced Ken Fisher’s portfolio since at least early 1999 and which the billionaire money manager may never sell.
Our Methodology
The following data is gathered from Fisher Investments‘ latest 13F filing with the SEC. We follow hedge funds like Fisher Investments because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2022 reporting period.
10 Stocks Billionaire Ken Fisher May Never Sell
10. Ross Stores, Inc. (NASDAQ:ROST)
Value of Fisher Investments’ 13F Position: $1.93 million
Number of Hedge Fund Shareholders: 45
While Chevron Corporation (NYSE:CVX), Merck & Co., Inc. (NYSE:MRK), and The Procter & Gamble Company (NYSE:PG) may be fairly understandable long-term holdings, a less obvious pick of Fisher’s is Ross Stores, Inc. (NASDAQ:ROST), a holding of his firm’s which also dates back to at least early 1999. Fisher raised his stake in Ross Stores by 32% to 21,361 shares during Q1. Hedge fund ownership of ROST fell by 32% during 2021, but ticked up slightly during the first quarter of 2022.
Ross Stores, Inc. (NASDAQ:ROST) shares got off to a strong start in Q2 but collapsed in late May following disappointing earnings results and guidance from the off-price apparel retailer. Q1 revenue fell 4% year-over-year to $4.33 billion while comparable sales sagged by 7%. The company cut its full-year earnings guidance in the face of shifting consumer trends, lowering its per share estimates to between $4.33 and $4.58, down $0.37 on the low end and $0.62 on the high end from previous guidance.
In June, Cleveland Research revealed that its checks indicated Ross Stores, Inc. (NASDAQ:ROST)’s Q2 comp sales were again underperforming, coming in below consensus and on the low end of the company’s guidance. Barclay’s lowered its price target on Ross Stores to $85 from $119 in late May, but kept an ‘Outperform’ rating on shares.
9. Bio-Rad Laboratories, Inc. (NYSE:BIO)
Value of Fisher Investments’ 13F Position: $78.9 million
Number of Hedge Fund Shareholders: 46
Fisher Investments owns an even 140,000 shares of Bio-Rad Laboratories, Inc. (NYSE:BIO) after selling off a whopping 24 shares during Q1. Other hedge funds are also starting to get on the Bio-Rad bandwagon, as there was a 15% jump in ownership of the stock during Q1. Seth Rosen’s Nitorum Capital build a new BIO stake in Q1 consisting of 110,557 shares.
Bio-Rad Laboratories, Inc. (NYSE:BIO)’s revenue and earnings fell slightly year-over-year in Q1, but the biotech’s bottom line results nonetheless trounced analysts’ expectations, coming in at $4.94 per share, more than $2.00 above estimates. The firm’s $700 million in revenue also beat estimates by $22 million. Citi lowered its price target on BIO shares to $700 from $750 this month, but kept a ‘Buy’ rating on shares.
At its investors day event in February, Bio-Rad Laboratories, Inc. (NYSE:BIO) outlined its plans to grow core revenue at a CAGR of 9% between 2021 and 2025, while achieving a 28% adjusted EBITDA margin by 2025. The company’s aims to achieve those targets by continuing to expand its product pipeline, grow its customer base, and introduce new diagnostic tools. The company was successful in surpassing all of its previously outlined long-term targets, which it made in 2017.
8. The Toro Company (NYSE:TTC)
Value of Fisher Investments’ 13F Position: $84.4 million
Number of Hedge Fund Shareholders: 24
Ken Fisher’s firm held 987,409 shares of The Toro Company (NYSE:TTC) at the end of March, a slight 2% dip from three months earlier. TTC shares have been a 40-bagger for Fisher since early 1999. As with Scotts below, other hedge funds seem to be bailing on landscaping-related names in recent quarters. Hedge fund ownership of TTC has fallen for four straight quarters, dropping by 31% over the past year.
The Toro Company (NYSE:TTC) shares have fallen by 21% this year, boosting their dividend yield to a solid 1.53%. Despite the share price decline however, the stock still trades at a fairly rich 20x forward earnings. Toro has continued to deliver solid growth in recent years however, driving revenue 17% higher in its fiscal 2021, while net income shot up by 24%.
Low double-digit growth on both the top and bottom lines is expected this year before sales growth is anticipated to slow to 5.8% in 2023. On the other hand, earnings growth is expected to accelerate to 19.1% in fiscal 2023, driven by The Toro Company (NYSE:TTC)’s near-record margins. In the company’s fiscal Q2, it grew gross margin by 30 basis points quarter-over-quarter, while adjusted operating earnings margin shot up by 390 basis points.
7. The Scotts Miracle-Gro Company (NYSE:SMG)
Value of Fisher Investments’ 13F Position: $92.4 million
Number of Hedge Fund Shareholders: 20
Ken Fisher has owned shares of The Scotts Miracle-Gro Company (NYSE:SMG) dating back to well before the stock became one of the 10 Weed Stocks to Buy in 2022 thanks to its growing hydroponics business. Fisher Investments’ stake in SMG was trimmed by 1% to 751,308 shares during Q1. Unlike Fisher, other hedge funds have been snuffing out their investments in Scotts in recent quarters, as hedge fund ownership has fallen for four straight quarters, sinking by 43% during that time.
The Scotts Miracle-Gro Company (NYSE:SMG) shares have wilted by 52% this year due to the company slashing guidance in early June, which prompted numerous analysts to slash their own price targets on the company’s stock. Management previously guided for U.S sales to be between flat and a 3% decline this year, which was later updated to between a 4% and 6% fall.
More startling was the massive growth cut to The Scotts Miracle-Gro Company (NYSE:SMG)’s cannabis subsidiary Hawthorne, which was previously forecast to grow sales by 8% to 12% this year. In the latest update, Scotts’ stomped on that previous guidance, calling instead for a sales decline of anywhere from 40% to 45% for the unit due to some serious oversupply on the cannabis market.
6. Pfizer Inc. (NYSE:PFE)
Value of Fisher Investments’ 13F Position: $128 million
Number of Hedge Fund Shareholders: 80
Pharmaceutical companies have been a staple long-term holding of Ken Fisher’s, with Pfizer Inc. (NYSE:PFE) being another one of his decades-long stock picks. He trimmed his fund’s stake in PFE by 1% during Q1, holding 2.47 million shares at the end of the quarter. Despite the company’s vaccine-related tailwinds of the past couple years, hedge fund ownership of Pfizer remains well off its all-time highs set in late 2015 and early 2016.
Those vaccine windfalls should persist throughout 2022 and possibly beyond, depending on how much of a foothold the new omicron variant is able to gain. As it is, Pfizer Inc. (NYSE:PFE) expects to top $100 billion in sales this year while generating tens of billions in free cash flow. In Q1, Pfizer bought back shares for the first time since 2019, $2 billion worth in all, while also returning $3 billion to shareholders in the form of dividend payouts. Expect more of the same in the quarters to come, with Pfizer also seeking out acquisition opportunities to set itself up with a more diversified pipeline and robust base of operations.
In its Q4 2021 investor letter, ClearBridge Investments discussed how Pfizer Inc. (NYSE:PFE)’s Covid-19 vaccine, and later its antiviral pill, each impacted the company’s investment decisions:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer Inc. (NYSE:PFE) had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.”
In the next half of this article we’ll look at Fisher’s positions in Chevron Corporation (NYSE:CVX), Merck & Co., Inc. (NYSE:MRK), The Procter & Gamble Company (NYSE:PG), and two other stocks, all of which he may never sell.
Click to continue reading and see the 5 Stocks Billionaire Ken Fisher May Never Sell.
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Disclosure: None. 10 Stocks Billionaire Ken Fisher May Never Sell is originally published at Insider Monkey.
