Ken Fisher’s Fisher Asset Management reported a portfolio value of $33.50 billion at the end of December 2011, up from $30.56 billion at the end of September. The firm made significant changes to its several existing positions in its portfolio. Here we compiled a list of stock positions that were cut by more than 20% in Fisher’s portfolio during the fourth quarter 2011.
| Company | Ticker | Value (x$1000) | Change |
| Banco Santander SA (ADR) | STD | 150,782 | -30.58% |
| General Electric Co. | GE | 396,958 | -29.52% |
| NetApp Inc. | NTAP | 149,563 | -26.51% |
| PNC Financial | PNC | 258,294 | -26.20% |
| Mosaic Co. | MOS | 140,577 | -26.15% |
| Medtronic Inc. | MDT | 251,670 | -24.85% |
| Halliburton Co. | HAL | 148,635 | -24.11% |
| Cnooc Ltd. (ADR) | CEO | 247,227 | -23.27% |
| Exxon Mobil Corp | XOM | 474,998 | -21.57% |
| Cheung Kong Ltd. (ADR) | CHEUY | 144,686 | -21.53% |
| Banco Bradesco (ADR) | BBD | 250,537 | -21.05% |
| Wells Fargo & Co | WFC | 244,709 | -20.51% |
Ken Fisher cut his Banco Santander SA (STD) position by 31% during the fourth quarter. He had a $232 million position at the end of the third quarter. That position was 7.6 times bigger than Jim Simons’ position during Q3. After the reduction, Fisher had still $150.8 million invested in the stock. The Spanish financial group was hammered in 2011 due to the European debt crisis. The company’s subsidiaries are closely tied to the European banking system. Recently Fitch also downgraded Banco Santander’s subsidiaries in Latin America. This is a very risky stock but we like the stock’s high dividend yield and low forward PE ratio of 7.19. However, we only recommend a small position for investors who don’t mind the risk.
Fisher also cut his position in General Electric Co. (GE) by 30% over the fourth quarter, moving from more than 31 million shares at the end of September to 22 million shares at the end of the year. General Electric is expected to grow its earnings by around 12% over the next five years. Barring another recession GE’s 2014 forward PE is very likely to be below 10. We believe GE is undervalued because the company has an exposure to the financial sector via GE Capital. Moreover, it seems GE’s effort in utilizing green energy was also undervalued by the market. We are cautiously optimistic about the stock.
Ken Fisher largely cut his stake in NetApp Inc. (NTAP), from 5.6 million shares at the end of September to 4.1 million shares at the end of December. Fisher picked NTAP during the first quarter of 2011, when he initiated a position of 5.2 million shares. It’s possible that he lost a lot in NTAP because the stock was trading at above $50 per share in Q1, while it was priced at less than $40 in Q4. We don’t recommend NTAP as we think the stock isn’t cheap. It has a forward PE of 23.8 but expected to grow its earnings by only 15% annually over the next five years. There are faster growing tech stocks trading at much lower forward PE ratios.
Wells Fargo & Co (WFC) is another financial position that was cut by more than 20% in Ken Fisher’s portfolio. Wells Fargo is the ninth most popular stock among hedge funds (see 10 most popular stocks). The stock’s low forward PE ratio is the main reason behind this interest. Warren Buffett took advantage and bought 22 million shares of the bank even though he had more than $10 billion invested in the stock (see Warren Buffett’s portfolio).
Ken Fisher also cut his stakes in oil stocks like Halliburton (HAL) and Exxon Mobil (XOM). We don’t think it’s a good idea to reduce our exposure to financials and energy stocks. We agree with Fisher that NTAP is a speculative play and investors should avoid it.
