Billionaire Ken Fisher is the CEO of Fisher Asset Management, a fund with around $50.05 billion in equities as of the end of March. Mr. Fisher has a net worth of around $2.90 billion, which makes him one of the richest self-made billionaires in the world according to Forbes, and the 236th billionaire in the US. Moreover, the founder and CEO of Fisher Asset Management is the author of several books, including four New York Times bestsellers and is one of the longest running columnists in Forbes’ history, authoring the “Portfolio Strategy” column for more than 30 years.
Mr. Fisher’s impressive biography makes him one of the most interesting investors to follow. The billionaire prefers to hold a diversified portfolio and he likes to invest in big names and companies that have fat gross margins. Fisher Asset Management’s latest 13F shows a strong focus on the Finance, Technology and Healthcare sectors and its largest holdings are represented by some of the largest and best performing companies from these sectors, such as Apple Inc. (NASDAQ:AAPL), Pfizer Inc. (NYSE:PFE), and Wells Fargo & Co (NYSE:WFC).
Fisher’s 422 long positions in companies with a market cap of over $1.0 billion had modest weighted average returns of 1.47% during the first three months of 2015. However, the main question is whether a smaller investor can benefit by imitating Mr. Fisher’s stock picks. The short answer is yes. Even though the 13F filings of large investors are published with a significant delay, it does not offset opportunities to invest in the same stocks. The key is to focus on their small-cap picks, as we determined through a series of backtests for the period between 1999 and 2012. The backtests showed that a portfolio of the 15 most popular small-cap stocks among several hundred investors managed to beat the market by an average of nearly a percentage point per month. This system has showed the same strong returns after going live, having gained around 137% in the last 2.5 years, outperforming the S&P 500 ETF (SPY) by some 82 percentage points (read more details here).
Let’s now take a closer look at Mr. Fisher’s largest holdings as of the end of March, since they are represented by companies that the investor is fond of and have been among his long-term investments. On the first spot is Apple, which owns one of the most profitable businesses ever, in which Fisher Asset Management disclosed a $1.35 billion position that contains 10.81 million shares. It’s not surprising that Mr. Fisher likes Apple Inc. (NASDAQ:AAPL) and that it represents his largest position. Apple Inc. (NASDAQ:AAPL) is the largest in terms of market capitalization and its latest financial results (for the second quarter of fiscal 2015) came in well ahead of estimates and above the previous-year results, with revenue of $58 billion and EPS of $2.33, versus $45.6 billion and $1.66 a year earlier. Apple Inc. (NASDAQ:AAPL) also posted a gross margin of 40.80%, up from 39.3% for the same period a year ago. Another fund manager that is bullish on Apple is David Einhorn of Greenlight Capital. Here is what Greenlight said in its latest letter to investors:
“[…] While we have modest expectations for Apple Watch and don’t expect AAPL to maintain this level of growth, the market expects even less, as it continues to value AAPL shares at a discounted valuation. We believe that AAPL is a superior company that merits a premium multiple.”
Fisher’s stake in Pfizer Inc. (NYSE:PFE) is the second-largest in its equity portfolio. The position in the pharmaceutical company amasses 31.21 million shares valued at $1.09 billion. Pfizer Inc. (NYSE:PFE) has also recently reported its latest quarterly financial results, for the first quarter of 2015, posting revenue of $10.86 billion and net profit of $2.36 billion, or $0.36 per share, which came ahead of estimates. However, the significant exposure to the international market has affected the company’s revenue estimates due to a stronger dollar. Pfizer now expects revenue ranging between $44 billion and $46 billion for the current year. Fisher is by far the largest shareholder of Pfizer Inc. (NYSE:PFE) among the funds we track, followed by Cliff Asness’ AQR Capital Management and Ric Dillon’s Diamond Hill Capital, among others.
Johnson & Johnson (NYSE:JNJ) is another pharmaceutical company that is among Fisher’s top picks. The fund reported holding 10.46 million shares worth $1.05 billion. Aside from the strong performance of the stock, Johnson & Johnson (NYSE:JNJ) is also one of the most stable dividend payers, with a yield of 3.01%. Recently, the company announced a 7% rise in its quarterly dividend to $0.75 per share. Again, Fisher is the largest shareholder of Johnson & Johnson (NYSE:JNJ) among the funds from our database, while on the second spot is Donald Yacktman’s Yacktman Asset Management with 8.61 million shares, according to its latest 13F filing.
On the fourth spot is one of Mr. Fisher’s picks from the finance sector. In Wells Fargo & Co (NYSE:WFC), the investor disclosed a $1.0 billion position that contains 18.54 million shares. In the latest round of earnings results, Wells Fargo posted revenue and earnings above the estimates and higher in comparison with the first quarter of 2014. However, the low interest rate environment is affecting Wells Fargo’s lending business and to offset it the banking company plans to expand its insurance business. The move comes as Wells Fargo & Co (NYSE:WFC) is already one of the largest insurance players among major banks. Another point in Wells Fargo & Co (NYSE:WFC)’s support is that it is backed by Warren Buffett, who owns some 463.45 million shares as of the end of 2014.
In United Technologies Corporation (NYSE:UTX), Fisher disclosed holding 8.07 million shares worth $945.53 million. United Technologies is a $102 billion provider of services for the building systems and aerospace industries. The company is currently under investigation by the Securities and Exchange Commission regarding allegations of violations of US anti-bribery laws by its commercial and aerospace businesses. The investigation has been ongoing for around a year, during which time the stock of United Technologies Corporation (NYSE:UTX) has inched down by 1.90%. Aside from Fisher, other shareholders of United Technologies Corporation (NYSE:UTX) include Ken Griffin‘s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management.
Disclosure: None
