Billionaire Ken Fisher’s Favorite Tech Stocks for Q3

Does anyone know billionaire Ken Fisher? Of course, especially in the money management space. Mr. Fisher, the founder and current CEO of Fisher Investments, is probably best known within the investment community for his Forbes Portfolio Strategy column, which he has been writing for more than three decades.

His money management firm, founded in 1979, has grown into one of the premier money management firms in the world with $67 billion under management. Fisher Investments manages money for some of the wealthiest Americans, so one would definitely benefit from having a look into the equity portfolio of this huge player in the money management space. Mr. Fisher’s Fisher Asset Management LLC recently filed its 13F for the June quarter, so Insider Monkey decided to compile a list of five technology stocks favored by the highly-esteemed money manager and his team.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

#5. Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM)

– Shares owned by Fisher Asset Management as of June 30: 29.24 Million

– Value of Fisher Asset Management’s holding as of June 30: $795.37 Million

Fisher Asset Management owns 29.24 million American Depositary Shares (ADSs) of Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) as of the end of the second quarter, 1.14 million ADSs more than at the end of the March quarter. The upped stake was valued at $795.37 million on June 30 and accounted for 1.5% of the firm’s entire portfolio. The Taiwan-based contract chip manufacturer has seen its market value gain 18% since the beginning of 2016. Reportedly, TSMC will be the sole manufacturer of the A10 chip that will power the much-anticipated iPhone 7, so the chip maker should benefit from the upcoming iPhone cycle regardless of whether iPhone unit sales will rebound or not. In a fresh monthly Forbes column published in mid-June, Ken Fisher said that TSMC “grows, gains market share, maintains profitability and flabbergasts most-while remaining underappreciated among stocks”. Howard Marks’ Oaktree Capital Management had 4.46 million ADSs of Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) in its portfolio at the end of March.

#4. United Technologies Corporation (NYSE:UTX)

– Shares owned by Fisher Asset Management as of June 30: 8.36 Million

– Value of Fisher Asset Management’s holding as of June 30: $869.32 Million

The multi-billion-dollar asset manager reduced its exposure to United Technologies Corporation (NYSE:UTX) by a mere 13,501 shares during the second quarter of 2016, ending the period with 8.36 million shares. The trimmed stake was worth $869.32 million at the end of the quarter and made up 1.6% of the firm’s portfolio. The shares of the global provider of high technology products and services to the building systems and aerospace industries are up 8% so far in 2016 despite investor worries over economic risks related to the United Kingdom’s imminent exit from the European Union and slowing growth in China. These economic risks could lead to lower levels of end-market demand in construction, as well as in both the commercial and defense segments of the aerospace industry. United Technologies, which manufactures jet engines and elevators, produces actuation systems for the aerospace industry in west-central England, so the company does face certain risks associated with the so-called Brexit. Mason Hawkins’ Southeastern Asset Management was the owner of 7.10 million shares of United Technologies Corporation (NYSE:UTX) on March 31.

#3. Microsoft Corporation (NASDAQ:MSFT)

– Shares owned by Fisher Asset Management as of June 30: 18.30 Million

– Value of Fisher Asset Management’s holding as of June 30: $962.44 Million

The asset manager founded by billionaire Ken Fisher increased its position in Microsoft Corporation (NASDAQ:MSFT) by 80,138 shares during the April-to-June quarter. The investment firm owns 18.30 million Microsoft shares as of June 30, valued at $962.44 million. Just recently, Microsoft announced it would pay $26.2 billion for LinkedIn Corp (NYSE:LNKD), with Microsoft bears saying this deal would be just another bad acquisition made by the tech giant. The $26.2 billion-price tag gives Microsoft a very unique asset, namely LinkedIn’s valuable user base. However, Ken Fisher is not one of those bears, as he believes Microsoft represents a strong buying opportunity at the moment. “It sounds boring, but buy Microsoft”, said Mr. Fisher in a recent monthly Forbes column. The billionaire investor called Microsoft “a solid pick in a surprisingly solid year”. Microsoft shares are down 4% since the beginning of 2016. Ray Carroll’s Breton Hill Capital upped its stake in Microsoft Corporation (NASDAQ:MSFT) by 8% during the June quarter to 29,416 shares.

#2. Apple Inc. (NASDAQ:AAPL)

– Shares owned by Fisher Asset Management as of June 30: 11.31 Million

– Value of Fisher Asset Management’s holding as of June 30: $1.10 Billion

Fisher Asset Management did not adjust significantly its position in Apple Inc. (NASDAQ:AAPL) during the three months that ended June 30, as the firm’s stake in the iPhone maker was reduced by a mere 312 shares quarter-over-quarter. Mr. Fisher’s investment firm has 11.31 million Apple shares in its portfolio as of the end of the second quarter, worth $1.10 billion as of June 30. Apple has lost 7% of its market value since the start of 2016 and analysts argue that the iPhone maker trades at a low price-to-earnings multiple and represents an attractive value play. However, investors are worrying about slowing iPhone sales, as well as lackluster new products. According to fresh estimates, the company’s line of Mac computers is not selling at the pace it used to, so Apple may need to launch a new laptop and other products to turn things around. Estimates show that Apple shipped 5%-to-8% fewer computers in the second quarter of 2016 than a year ago. Warren Buffett’s Berkshire Hathaway acquired a new stake of 9.81 million shares of Apple Inc. (NASDAQ:AAPL) during the first quarter.

#1. Amazon.com Inc. (NASDAQ:AMZN)

– Shares owned by Fisher Asset Management as of June 30: 1.98 Million

– Value of Fisher Asset Management’s holding as of June 30: $1.50 Billion

The multi-billion-dollar asset manager trimmed its stake in Amazon.com Inc. (NASDAQ:AMZN) by 20% during the second quarter of 2016 to 1.98 million shares. The reshuffled stake was valued at nearly $1.50 billion at the end of June. Amazon.com was the largest equity holding in Mr. Fisher’s portfolio on June 30, accounting for 2.8% of the entire value of that portfolio. Earlier this week, the e-commerce giant commenced its biggest operation of the year called “Amazon Prime Day”. The company introduced Prime Day last year as a one-day sale solely for members of its Prime subscription service. The so-called Prime Day offers existing subscribers a reason to spend more, simultaneously encouraging more consumers to come into the possession of the $99-per-pear Prime service. The e-commerce behemoth generated revenue in the range of $375 million-to-$400 million on last year’s Prime Day, with retail advisory firm FBIC anticipating this year’s Prime Day to generate $525 million in sales. Amazon shares are up 10% so far in 2016. Andreas Halvorsen’s Viking Global owned 3.44 million shares of Amazon.com Inc. (NASDAQ:AMZN) on March 31.

Disclosure: None