Ken Fisher’s Top 5 Healthcare Stock Picks

In this article, we discuss the top 5 healthcare stock picks of Ken Fisher. If you want to read our detailed discussion about the healthcare industry, head over to Ken Fisher’s Top 15 Healthcare Stock Picks.

5. Stryker Corporation (NYSE:SYK)

Fisher Asset Management’s Stake Value: $1,168,725,000

Number of Hedge Fund Holders: 46

Stryker Corporation (NYSE:SYK) specializes in two major segments – MedSurg and Neurotechnology, and Orthopaedics and Spine. It produces equipment used in medical procedures, such as spinal implants, knee replacements, and other interbody systems. On August 2, Stryker Corporation (NYSE:SYK) announced a Q2 revenue of $5 billion, along with a non-GAAP EPS of $2.54, outperforming analysts’ expectations by $170 million and  $0.16, respectively. At the end of Q2 2023, Fisher Asset Management held a $1.17 billion stake in Stryker Corporation (NYSE:SYK), making it one of the top healthcare stock picks of Ken Fisher.

According to Insider Monkey’s second quarter database, 46 hedge funds were long Stryker Corporation (NYSE:SYK), as opposed to 42 hedge funds during the last quarter. Terry Smith’s Fundsmith LLP is the largest investor in the company, with 5.5 million shares worth $1.68 billion. 

ClearBridge Large Cap Growth Strategy said this about Stryker Corporation (NYSE:SYK) in its second quarter 2023 investor letter:

“Supporting our widely-held names in the second quarter were solid contributions in health care, where we benefited from an overweight to medical device stocks Intuitive Surgical and Alcon which moved higher on signs of improving procedure growth. Supply chain headwinds and labor shortage bottlenecks are now easing while ambulatory surgery centers are adding more surgery hours, which should be a boon to these stocks as well as to orthopedic and spine surgery products specialist Stryker Corporation (NYSE:SYK).”

4. Novo Nordisk A/S (NYSE:NVO)

Fisher Asset Management’s Stake Value: $1,233,268,000

Number of Hedge Fund Holders: 43

Novo Nordisk A/S (NYSE:NVO) is a Danish healthcare company engaged in the research, development, manufacture, and distribution of pharmaceutical products. On August 10, Novo Nordisk A/S (NYSE:NVO) announced a Q2 revenue of DKK 54.3 billion, along with a GAAP EPS of DKK 8.63. It is one of Ken Fisher’s top healthcare stocks. At the end of June 2023, Fisher Asset Management held 7.62 million shares of Novo Nordisk A/S (NYSE:NVO) worth $1.23 billion.

According to Insider Monkey’s second quarter database, 43 hedge funds were bullish on Novo Nordisk A/S (NYSE:NVO), compared to 46 hedge funds in the last quarter. 

Rowan Street Capital made the following comment about Novo Nordisk A/S (NYSE:NVO) in its second quarter 2023 investor letter:

“Our current portfolio is made up of just 10 companies — we are very focused! We described our ‘10-Player All-Star Team’ philosophy in our Q1 2018 Letter (we encourage you to review it). We have been building this portfolio since our founding in 2015. In total, over the past 8 years, we bought stock in 47 different companies (that’s ~6 per year), and obviously, for anyone who is good at arithmetic, we sold 37 of them (~4.6 per year). We are constantly trying to learn from every decision (good or bad) that we make. We went through every position that we’ve sold since 2015 and analyzed how we would have done had we held on to those positions. The top 3 performing positions would have been: Chipotle (CMG) +630%, Tractor Supply (TSCO) +315% and Novo Nordisk A/S (NYSE:NVO) +387%. Your managers are at fault here because we sold all of these (in 2017-18) for non-fundamental reasons. All of these continued to be great businesses and management has executed at very high levels. In all three cases, we made a decision to sell because we thought the stock price got way ahead of itself.”

3. Merck & Co., Inc. (NYSE:MRK)

Fisher Asset Management’s Stake Value: $1,459,443,000

Number of Hedge Fund Holders: 78

Merck & Co., Inc. (NYSE:MRK) specializes in healthcare products for humans and animals, in addition to providing treatments for neurological disorders, cancer, and diabetes. On July 25, Merck & Co., Inc. (NYSE:MRK) declared a $0.73 per share quarterly dividend, in line with previous. The dividend is payable on October 6, to shareholders of record on September 15. At the end of Q2 2023, Ken Fisher owned shares of Merck & Co., Inc. (NYSE:MRK) worth $1.46 billion, making it one of his top healthcare plays. 

According to Insider Monkey’s second quarter database, a total of 78 hedge funds were bullish on Merck & Co., Inc. (NYSE:MRK). In the last quarter, this number was 75. Cliff Asness’ AQR Capital Management held a prominent position in the company, with 2.9 million shares worth $331.8 million.

Baron Health Care Fund had this to say about Merck & Co., Inc. (NYSE:MRK) in its second quarter 2023 investor letter:

“During the second quarter, Merck & Co., Inc. (NYSE:MRK) filed the first lawsuit (followed by the filing of additional lawsuits by other parties) against the federal government challenging the constitutionality of the Medicare Drug Price Negotiation Program (the Program) that Congress established as part of the Inflation Reduction Act. In Merck’s complaint, Merck argues that the Program violates the Fifth Amendment because it allows the federal government to take Merck’s innovative drugs without providing just compensation for them. In addition, Merck argues the Program violates the First Amendment because it forces them to sign an agreement saying the government mandated prices are fair and the result of a negotiation when in fact, Merck argues, prices are not negotiated or fair. These lawsuits will take time to work their way through the legal process and in the meantime, the Program moves ahead on its scheduled path. The consensus view is that these lawsuits will not be successful, and the Program will remain in place. We suspect Merck’s arguments may convince at least a few U.S. Supreme Court Justices when the case reaches the U.S. Supreme Court, but the ultimate outcome is impossible to predict. For now, we assume the Program will remain in place and invest with that framework in mind.”

2. Intuitive Surgical, Inc. (NASDAQ:ISRG)

Fisher Asset Management’s Stake Value: $1,519,633,000

Number of Hedge Fund Holders: 68

Intuitive Surgical, Inc. (NASDAQ:ISRG) is a biotechnology company that manufactures medical equipment for patient monitoring, care, and minimally invasive surgical procedures. On July 20, Intuitive Surgical, Inc. (NASDAQ:ISRG) reported a Q2 revenue of $1.76 billion and a non-GAAP EPS of $1.42, which exceeded the market consensus by  $20 million and $0.09, respectively. Ken Fisher, as of the second quarter of 2023, held 4.4 million shares of Intuitive Surgical, Inc. (NASDAQ:ISRG) worth $1.52 billion, making it one of his top healthcare stocks. 

According to Insider Monkey’s second quarter database, 68 hedge funds held stakes in Intuitive Surgical, Inc. (NASDAQ:ISRG). In contrast, 67 hedge funds had invested in the company during the preceding quarter. Ken Griffin’s Citadel Investment Group held a prominent stake in the company, with 1.91 million shares worth $663.9 million.

Baron Health Care Fund had this to say about Intuitive Surgical, Inc. (NASDAQ:ISRG) in its second quarter 2023 investor letter:

“Strength in health care equipment was largely due to the outperformance of sleep apnea device company Inspire Medical Systems, Inc. and robotic surgery system pioneer Intuitive Surgical, Inc. (NASDAQ:ISRG). Intuitive Surgical, Inc. manufactures and markets the da Vinci Surgical System, a robotic system used for minimally invasive procedures. Shares increased after Intuitive reported strong first quarter financial results highlighted by a 26% increase in procedures and raised guidance for 2023. These results, which came in well above Street estimates, were driven by strength in general surgery procedures in the U.S. and non-urology procedures outside the U.S. We continue to believe Intuitive has a large opportunity to expand the use of robotic surgery over time.”

1. Eli Lilly and Company (NYSE:LLY)

Fisher Asset Management’s Stake Value: $1,987,678,000

Number of Hedge Fund Holders: 87

Eli Lilly and Company (NYSE:LLY) is one of the leading pharmaceutical companies in the world. It develops treatments and medical therapies for cancer, diabetes, and other disorders. On August 8, Eli Lilly and Company (NYSE:LLY) reported a Q2 revenue of $8.31 billion and a non-GAAP EPS of $2.11, beating the market consensus by $700 million and $0.11, respectively. At the end of Q2 2023, Ken Fisher revealed a position worth roughly $2 billion in Eli Lilly and Company (NYSE:LLY), making it his largest healthcare holding. 

According to Insider Monkey’s second quarter database, 87 hedge funds were bullish on Eli Lilly and Company (NYSE:LLY). During the preceding quarter, 72 hedge funds were invested in the company. Rajiv Jain’s GQG Partners held one of the largest stakes in the company, with 3.1 million shares worth $1.48 billion. 

Baron Health Care Fund said this about Eli Lilly and Company (NYSE:LLY) in its second quarter 2023 investor letter:

“Eli Lilly and Company (NYSE:LLY) is a global pharmaceutical company developing and marketing drugs in oncology, diabetes, Alzheimers, immunology, and other diseases. Shares climbed due to continued investor excitement around novel weight loss drugs in the GLP-1 class, including Lilly’s Mounjaro. Given demand that is orders of magnitude more than supply, the full potential of the GLP-1 class of drugs remains unclear, with sales projections eclipsing $100 billion. This number would set a new industry record by a large margin. Drug development in this space is understandably fierce, and as recently as late June, Eli Lilly revealed new data from its diabetes/obesity pipeline assets that will further enhance the value proposition offered to patients. We retain conviction.

In pharmaceuticals, our largest investment continues to be in Eli Lilly and Company. Lilly’s new diabetes drug Mounjaro is on track to be FDA approved for obesity in 2023. At a medical conference in June, Lilly announced Phase 2 clinical data for a next-generation obesity drug called retatrutide, which showed the drug achieved up to 17.5% mean weight loss at 24 weeks in adults with obesity and up to 24.2% mean weight loss at 48 weeks. Lilly also announced Phase 2 clinical data showing its once daily oral drug orforglipron achieved up to 14.7% mean weight loss at 36 weeks in adults with obesity. The results from these pipeline obesity medicines confirmed Lilly’s status as a market leader in the diabetes and obesity category. Also during the quarter, Lilly announced that its drug Donanemab slowed cognitive and functional decline in a Phase 3 study in people with early symptomatic Alzheimer’s disease. We continue to think the company should be able to grow revenue and earnings at attractive rates through the end of the decade and beyond.”

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