In this article, we discuss Ken Fisher’s performance in 2021 and the 5 best performing stocks in his portfolio. If you want to read our detailed analysis of these stocks, go directly to Ken Fisher’s Performance in 2021: 15 Best Performing Stocks.
5. Marathon Oil Corporation (NYSE:MRO)
Number of Hedge Fund Holders: 40
Gain in Share Price in 2021: 126%
Marathon Oil Corporation (NYSE:MRO) is an independent oil and gas firm. Top hedge funds have been piling into the stock as energy prices skyrocket. At the end of the third quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $903 million in Marathon Oil Corporation (NYSE:MRO), up from 34 in the previous quarter worth $665 million.
Marathon Oil Corporation (NYSE:MRO) has been in the Fisher portfolio since early 2019. At the end of September, Fisher Asset Management owned more than 7.4 million shares of Marathon Oil Corporation (NYSE:MRO) worth over $101 million, representing 0.06% of the portfolio. The fund increased its stake in Marathon Oil Corporation (NYSE:MRO) by 2% between June and September compared to filings for the second quarter.
4. Nucor Corporation (NYSE:NUE)
Number of Hedge Fund Holders: 25
Gain in Share Price in 2021: 134%
Nucor Corporation (NYSE:NUE) makes and sells steel products. Fisher has a long-term bullish position on the stock. He first purchased a stake in Nucor Corporation (NYSE:NUE) during the fourth quarter of 2010, buying nearly 33,000 shares at an average price of $40.23 per share. With minor interruptions, Nucor Corporation (NYSE:NUE) has been a constant feature in the Fisher portfolio since. At the end of September, the fund owned 248,504 shares of Nucor Corporation (NYSE:NUE) worth over $24 million.
Apart from Fisher, other major hedge fund managers also hold large stakes in Nucor Corporation (NYSE:NUE). At the end of the third quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $199 million in Nucor Corporation (NYSE:NUE).
In its Q1 2021 investor letter, Madison Funds, an asset management firm, highlighted a few stocks and Nucor Corporation (NYSE:NUE) was one of them. Here is what the fund said:
“This quarter we are highlighting Nucor (NUE) as a relative yield example within the Materials sector. NUE is a leading manufacturer of steel and steel products. It is the largest steelmaker in the U.S. based on production volume with a vertically integrated business model. The company has a low fixed-cost position due to its use of electric arc furnaces, which are cleaner, less labor and energy-intensive than blast furnaces, and this results in low total costs per unit of steel produced. Our view is that a low cost position is an important attribute in a commodity business. NUE’s historical financial record supports this view as it has been profitable every year except for one over the past fifty years, unlike many steel producing peers. In addition, the company has a diverse product and mill portfolio that takes market share over time. We believe its scale, low fixed-cost position, consistent record of profitability and diverse mill portfolio result in a sustainable competitive advantage versus peers.
Our thesis on NUE is that it should benefit from higher steel prices as the U.S. economy recovers from the downturn caused by the Covid-19 pandemic. The company may also be a beneficiary of on-shoring, where manufacturing returns to the United States. These two dynamics should drive growth this year, and if the United States Congress passes new infrastructure legislation, that will provide another avenue for growth longer-term.
Importantly, NUE has a strong balance sheet and flexible capital spending model that can quickly adjust to changing economic conditions. If economic growth slows, NUE can quickly reduce its cost structure, something it has done successfully in prior cyclical downturns. The company has low financial leverage as its net debt/adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was only 0.9x at the end of last year, and it consistently generates positive free cash flow. These favorable characteristics differentiate NUE from other steel producers and help the company gain market share through disciplined capital allocation.
The fund purchased NUE at $56 in January, 2021, after it reached a low valuation with an attractive dividend yield and relative dividend yield versus the S&P 500. At the time or purchase, the stock yielded 3.3% and had a relative dividend yield of more than 2x the S&P 500, which was the high end of its historical range as shown in the bottom pane in the graph. The company is also a Dividend Aristocrat that has raised its dividend annually for 48 years. We expect continued dividend increases going forward.
Risks to the thesis include a prolonged economic downturn, lower steel prices and increasing steel import volumes that could hurt NUE financial performance. We believe these risks are manageable as economic growth is expected to be well above average this year. Specifically, Goldman Sachs is forecasting U.S. gross domestic product (GDP) growth of +8% in 2021, which would be the fastest pace of growth since 1950. Strong growth is likely to result in higher manufacturing activity, which we believe would be supportive of higher steel prices and limit risks to the thesis.”
3. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 50
Gain in Share Price in 2021: 167%
Devon Energy Corporation (NYSE:DVN) is an independent energy firm. It was one of the best-performing energy stocks of 2021, attracting the attention of top fund managers. Among the hedge funds being tracked by Insider Monkey, Wyoming-based investment firm Adage Capital Management is a leading shareholder in Devon Energy Corporation (NYSE:DVN) with 7.5 million shares worth more than $219 million.
Devon Energy Corporation (NYSE:DVN) was also one of the top holdings in the Fisher portfolio during 2021. The fund began the year with the ownership of 3.2 million shares of Devon Energy Corporation (NYSE:DVN), a figure that climbed to around 3.6 million by the end of the third quarter. The holding is now worth more than $127 million and represents 0.07% of the total portfolio.
In its Q4 2020 investor letter, GoodHaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
2. Synaptics Incorporated (NASDAQ:SYNA)
Number of Hedge Fund Holders: 23
Gain in Share Price in 2021: 191%
Synaptics Incorporated (NASDAQ:SYNA) makes and sells semiconductor products. A dramatic increase in the prices of chips due to supply chain pressures and increased demand has led to increased activity around the stock in recent months. At the end of the third quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $493 million in Synaptics Incorporated (NASDAQ:SYNA).
Like NVIDIA, the other top chip stock in the Fisher portfolio, Synaptics Incorporated (NASDAQ:SYNA) was a top holding in the Fisher universe during 2010 and 2011 but fell off the radar of the billionaire for the next five or six years. In the second quarter of 2018, the fund opened a new position in Synaptics Incorporated (NASDAQ:SYNA). This stake now consists of over a million shares worth close to $200 million.
In its Q3 2021 investor letter, FPA Queens Road, an asset management firm, highlighted a few stocks and Synaptics Incorporated (NASDAQ:SYNA) was one of them. Here is what the fund said:
“Synaptics, a developer of human interface (HMI) hardware and software, is experiencing a strategic shift to a higher-margin business, primarily Internet of Things (IoT) products, and continued its recent trend of announcing higher operating margins and providing favorable financial guidance. During the quarter, the company announced it was purchasing former portfolio holding, DSP Group, a communications chip designer.Management is executing well on this strategic shift and delivering impressive financial results.”
1. Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 44
Gain in Share Price in 2021: 231%
Alcoa Corporation (NYSE:AA) makes and sells aluminum products. The company has featured in the Fisher portfolio consistently since the second quarter of 2018. However, the stake, worth around 142,000 shares in 2018, has grown to more than 6.4 million shares worth $314 million, representing 0.19% of the entire portfolio.
Alcoa Corporation (NYSE:AA) has also turned heads elsewhere in the hedge fund industry. At the end of the third quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Alcoa Corporation (NYSE:AA), the same as in the preceding quarter worth $1.1 billion.
You can also take a peek at 10 Best EV Materials Stocks to Buy and 10 Best NFT Stocks to Buy Now.
