While it is eminently worthwhile to pour over the latest business news and SEC filings to find mega stocks for your portfolio, there are some sneaky ways to enhance your stock picking skills and maximize your returns.
One such way is to follow the lead of industry leaders. Hedge Funds employ the best brains and the latest techniques to pick stocks and we sifted through 13F filings to find two tech favorites of billionaire investors Ken Fisher and Steve Cohen
Fisher sees Cisco on growth path
Ken Fisher manages Fisher Asset Management and takes care of $35 billion. While Fisher is enamored with Pfizer Inc. (NYSE:PFE), its holding of Cisco Systems, Inc. (NASDAQ:CSCO) is also notable. Fisher has been adding to its long position in Cisco and it is now the fund’s third biggest position. The gamble seems to have paid off as Cisco Systems, Inc. (NASDAQ:CSCO) recently touched its new 52-week high and is riding the bull wave.
Cisco is clearly on a growth path as the company is growing not only organically but also through acquisitions. Its latest pick is Atlanta-based JouleX. The new acquisition will help Cisco Systems, Inc. (NASDAQ:CSCO) in adding energy management solutions to its portfolio.
Faiyaz Shahpurwala, senior vice president, Industry Solutions, said “JouleX’s technology will strengthen Cisco Services’ Smart Offerings and complements our evolving services strategy. It extends our ‘Internet of Things’ capabilities and is a good alignment to Cisco EnergyWise.”
The acquisition will be closed by the fourth quarter of the year and Cisco Systems, Inc. (NASDAQ:CSCO) agreed to pay $107 million in cash and incentives for the transaction. Earlier this year, the company acquired Ubiquisys and Intucell.
Investment thesis
Cisco Systems, Inc. (NASDAQ:CSCO) reported impressive financial numbers for its first quarter, blowing past consensus estimates. It has also started paying dividends and currently commands a dividend yield of nearly 3%. Apart from this, the company is also very investor friendly as it bought back more than $3 billion worth of its stock in the past 12 months. Cisco not only enjoys a good capital return, but is also a good candidate for income portfolios thanks to its impressive dividend yield and dividend growth rate.
Cisco Systems, Inc. (NASDAQ:CSCO)’s balance sheet is robust and the company is flush with funds. It is also innovating and trying to design new revenue streams by exploring newer venues like Software Defined Network solutions. Finally, the stock seems to be out of its long rut and is riding the bull wave. Any minor pullback is a good entry point for this stock.
Amazon.com, Inc. (NASDAQ:AMZN)’s diversified business strategy
Another tech stock favored by hedge fund managers is Amazon.com, Inc. (NASDAQ:AMZN).
Steve Cohen manages SAC Capital Advisers and has $14 billion worth of assets under management. In the last quarter, SAC Capital almost tripled its stake in the online retail company. Steve Cohen is not the only one endorsing Amazon, as the retail giant’s stock is among the stocks most favored by hedge fund honchos.
While Amazon.com, Inc. (NASDAQ:AMZN) is best known for its trendsetting online marketplace business model, it is fast becoming a force to reckon with in the up-and-coming cloud service segment. Its cloud offering is Amazon Web Services, launched in 2006. Amazon targets enterprise customers with its services and its business is likely to grow to $24 billion in annual revenue by 2022. Amazon.com, Inc. (NASDAQ:AMZN) runs on razor thin margins in its retail business segment and hence needs to develop alternate revenue streams to ensure its long-term survival. Its current lead in cloud segment bodes well for the company’s future.
Solid fundamentals
While Amazon.com, Inc. (NASDAQ:AMZN)’s profitability always remains under scrutiny owing to its thin margins, the company displays a robust balance sheet. It has grown its net sales by 227% since 2009. At the very same time, the company is also spending a hefty amount on capital outlays, which impaired its free cash flow but also ensured that the company remains competitive.
Amazon.com, Inc. (NASDAQ:AMZN) stock is up more than 8% this year so far, lagging behind broader markets. However, given its past growth performance, it is expected to gain traction. In its latest earnings announcement, the company easily surpassed the earnings estimates.
With the latest endorsement from SAC Capital, Amazon seems to be a good candidate for any long-term oriented portfolio.
The article Top Two Tech Picks of Billionaire Investors originally appeared on Fool.com and is written by Sharma Rina.
Sharma Rina has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Cisco Systems. The Motley Fool owns shares of Amazon.com. Sharma is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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