Ken Fisher’s Fisher Asset Management filed its most recent 13F, for the reporting period of March 31, on April 30. Since then we’ve covered the billionaire’s top picks for the quarter, his top new holdings, and his top picks that insiders also love. Now let’s take a look at some of his top longterm holdings, all of which he has held for at least three years.
Unsurprisingly, the majority of Fisher’s top longterm holdings are in large-cap stocks. Hedge funds and other big money managers like Fisher prefer to have the largest amounts of their capital invested in large and mega-cap stocks because these companies allow for more stability for their immense capital allocation. That’s why if we take a look at the most popular stocks among hedge funds, we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by seven basis points per month. On the other hand, we found that hedge fund expertise does give them a significant advantage over the average investor when it comes to small-cap stocks. This was confirmed through backtesting and in forward tests of our small-cap strategy since 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has returned more than 137%, beating the broader market by over 82 percentage points through the end of March (see the details).
Procter & Gamble Co (NYSE:PG) is one of Fisher’s longest holdings, dating all the way back to at least the first quarter of 1999 and his first recorded 13F filing in the SEC’s online database. Fisher currently holds 7.32 million shares valued at $564.23 million. It hasn’t necessarily been the best longterm investment, as shares have risen just over 60% in the last 16 years, an average appreciation of just 4% annually. While returns are a little stronger when we factor in dividend payments, which Procter & Gamble Co (NYSE:PG) has been paying out since 1987 with an average yield of between 2% and 3%, we can imagine the returns haven’t been what Fisher envisioned for the position.
More recently, the consumer goods giant has sought ways to further dismantle its business in an effort to improve its financial results. Among other moves, Procter & Gamble Co (NYSE:PG) sold its Duracell business for approximately $3 billion to billionaire Warren Buffett’s holding company Berkshire Hathaway, which also happened to be a longterm shareholder of Procter & Gamble Co (NYSE:PG). Buffett will trade in his $4.8 billion stake in Procter and Gamble as part of the transaction, with the company paying the difference to him in cash. That will leave value investor Donald Yacktman as the largest shareholder in our database once the transaction is completed later this year, with Yacktman owning 28.37 million shares through the end of the first quarter.
Apple Inc. (NASDAQ:AAPL) stands as another of Fisher’s top longterm holdings, with the position he first opened in the third quarter of 2002 now ranking in his top ten most valuable holdings as of March 31. The position of 10.51 million shares held a value of $664.34 million. Apple Inc. (NASDAQ:AAPL), which owns one of the most profitable businesses ever, has performed far batter than Procter & Gamble during that long run, to say the least. Apple’s shares have gained over 3,600% in those 13 years, rising from a mere $3.50 (based on a post stock-split calculation) to over $127. Also unlike Procter & Gamble, things only seem to be getting better and better for Apple, which is coming off back-to-back record setting earnings periods.
Despite that, not every hedge fund manager sees Apple Inc. (NASDAQ:AAPL) as an obvious, rosy investment. Value investor Richard Pzena recently shared his concerns with the company, noting in particular its sky-high margins, which he doesn’t see as being sustainable despite its growing track record of boasting such margins. To that end, Apple Inc. (NASDAQ:AAPL) did disappoint investors during its most recent earnings report when it announced that margins for the Apple Watch would be less than anticipated. That news has contributed to shares of Apple dipping since that latest earnings report near the end of April, despite the otherwise impressive results. Billionaire Carl Icahn on the other hand remains extremely bullish on Apple and owns the largest position in our database at over 52.76 million shares as of the end of 2014.
Fisher has held a stake in Amazon.com, Inc. (NASDAQ:AMZN) since the first quarter of 2011 and shares have gained more than 100% since then. While 2013 was a very strong one for the e-commerce giant’s stock, with it gaining a little over 50% over the course of that year, 2015 may end up topping it. Shares have already gained 40% year-to-date after two monster earnings reports that stunned some of the company’s bears, who called out Amazon.com, Inc. (NASDAQ:AMZN) for its overreaching growth and subsequent lack of profit. As Jim Cramer recently noted on CNBC, it now becomes more apparent that Amazon.com, Inc. (NASDAQ:AMZN) will be able to crank up its profits whenever it wants by simply spending less, thanks to a very profitable and growing web services business. Fisher has the second largest stake in Amazon within our database at 2.40 million shares valued at $640.20 million, with Lansdowne Partners holding the largest position as of the end of 2014.
The Home Depot, Inc. (NYSE:HD) is a stock Fisher has held since the first quarter of 2012, and also ranks as one of the stocks that both insiders and himself are bullish on. Fisher’s position stands at 8.08 million shares with a value of $564.00 million, while Home Depot insider Wayne Hewett, a director and member of the Finance Committee of the home improvement retailer, recently bought 350 shares at an average price of $113.68 per share. Shares have been on a steady rise since Fisher’s purchase, gaining 125%. The Home Depot, Inc. (NYSE:HD) appears poised to benefit from its hard stance on toxic flooring materials, a controversy over which has engulfed its rivals Lowe’s Companies, Inc. (NYSE:LOW) and Lumber Liquidators Holdings Inc (NYSE:LL). Home Depot is already the leading flooring supplier in the United States. Fisher held the largest position among the funds we track, though Ryan Pedlow’s Two Creeks Capital Management holds an extremely bullish position as of the end of 2014 which gave it exposure of 28% to The Home Depot, Inc. (NYSE:HD) in its equity portfolio.
Disclosure: None
