Billionaire Ken Fisher’s Fisher Asset Management maintains a broad and diversified equity portfolio consisting primarily of long positions. That portfolio was valued at $48.37 billion at the end of 2014, an increase from the $36.04 billion it was valued at two years ago. There are several prime stocks that Fisher has held over that two year period that have formed the backbone of his portfolio. In fact his top three picks from two years ago (which we’ll study in this article) are still among his top six picks today.
Unsurprisingly, they are all large-cap stocks, which have plenty of benefits for a wealthy investor like Ken Fisher. They are relatively stable companies, well-known and understood, in which a billionaire investor can safely invest large sums of money; Fisher had over $2.25 billion invested in those top three picks two years ago, and two years later, and with minimal change in those positions (in fact collectively, they are slightly reduced in terms of shares) they are worth over $3 billion, a 33% return.
While those large-cap picks have proven to be a success for Fisher, our research has shown that hedge funds and billionaires are far more adept at generating returns from their top small-cap picks. The 15 most popular small-cap picks among hedge funds outperformed the market by nearly 1 percentage point per month between 1999 and 2012 in backtests, and then outperforming the market by 76.7 percentage points over the last two-and-a-half years (see the details).
Nonetheless, as we can see with Fisher’s returns on his top large-cap picks, it’s also worthwhile to supplement your portfolio with some of these stocks for the stability they provide, and the dividends many of them pay out. That’s why we follow and report on their large-cap activity as well, especially when it comes to activist campaigns.
Now then, let’s check out Fisher’s top long-term picks, beginning with his top pick from two years ago Pfizer Inc. (NYSE:PFE). Fisher held 31.77 million shares valued at $796.85 million at the end of 2012, and through 2014 held just slightly less, 31.20 million shares. The value of those shares however has increased to $971.77 million as Pfizer Inc. (NYSE:PFE) shares were up by 26.07% during those two years.
Despite losing the exclusive patent rights to some of its most profitable drugs like Viagra and Lipitor in recent years, Pfizer Inc. (NYSE:PFE) continues to expand its business internationally, with particular success in China, and has had several exclusive treatments fill the void left behind by the declining sales of other treatments, most notably the nerve-pain drug Lyrica, sales of which were up 16% in the third quarter of 2014.
Kahn Brothers, formerly managed by Irving Kahn, who recently passed away, has been another long-term investor of Pfizer Inc. (NYSE:PFE), the company being one of the fund’s top picks for several years. After Fisher, AQR Capital Management, managed by Cliff Asness was the next largest shareholder among tracked funds at the end of 2014, with 13.93 million shares.
A position in Visa Inc (NYSE:V) was Fisher’s second-most valuable at the end of 2012, as he held 4.85 million shares worth $735.75 million at the time. Two years later, he had slashed his holding to 3.56 million shares, yet the value of the holding had increased to $932.58 million. That was the result of an exceptional two-year run for Visa Inc (NYSE:V), which was up by 79.36% over those two years (and up by 278% over the last four years).
Most recently, Visa Inc (NYSE:V) swooned investors with a double whammy in October, 2014, announcing a 20% hike to its dividend payments, bringing them to $0.48 per quarter. A couple of days later, Visa released its fiscal fourth quarter and full-year earnings results to impressed investors, as adjusted earnings were up 14% for the quarter, and 15% for the year, while the credit company showed strong international growth.
Fisher was also the top shareholder of Visa Inc (NYSE:V) among the funds that we track at the end of 2014, with billionaire Warren Buffett, another long-term shareholder of Visa, landing in second with 2.51 million shares.
Johnson & Johnson (NYSE:JNJ) represented Fisher’s third-most valuable position at the end of 2012, as he owned 10.39 million shares worth $728.67 million. Fisher slightly increased the position to 10.42 million shares over the next two years, while the value of the holding surged to $1.09 billion, ranking as his second-most valuable pick after Apple Inc. (NASDAQ:AAPL).
Johnson & Johnson (NYSE:JNJ), the largest pharmaceutical company in the world, also enjoyed a strong two-year run over 2013 and 2014, advancing by 51.64%. The $273.99 billion market cap company was rumored to be close to a deal to purchase Pharmacyclics Inc (NASDAQ:PCYC) on March 4, the news sending both companies’ shares up, but a couple of days later AbbVie Inc (NYSE:ABBV) announced its plans to buy Pharmacyclics, which proved to be a jackpot deal for Baker Bros. Advisors, as one of the top shareholders of the company.
Fisher was again the largest shareholder at the end of 2014 among the funds we track, with Donald Yacktman’s Yacktman Asset Management following with 8.61 million shares, a slight increase from the 8.40 million shares it held two years prior.
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