In early April, billionaire Ken Fisher’s Fisher Asset Management filed its 13F with the SEC, disclosing many of its long equity positions as of the end of March. We have been tracking 13F filings from hedge funds and other notable investors such as Fisher for some time as part of our work developing investing strategies; we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year. We can also analyze individual 13F filings for an individual manager’s favorite stocks in a number of areas, including dividend stocks. Read on for our thoughts on the five largest positions by market value in Fisher’s portfolio as of the beginning of April which currently pay dividend yields of 3% or higher and compare them to the fund’s previous filings.
Fisher owned a little less than 31 million shares of drug manufacturer Pfizer Inc. (NYSE:PFE) at the end of the first quarter of 2013. Pfizer Inc. (NYSE:PFE)’s current dividend yield is 3.3%, and given the large size of the company (its market capitalization is over $200 billion) and the stability which comes with being a healthcare stock its payments are probably safe for now. In addition, that valuation places the stock at a fairly decent trailing earnings multiple of 14, although revenue was down 9% last quarter compared to Q1 2012. Pfizer Inc. (NYSE:PFE) led our list of the most popular healthcare stocks among hedge funds during Q4.
Cisco Systems, Inc. (NASDAQ:CSCO) is another of the fund’s largest holdings with a yield of more than 3% at current prices. The networking technology company is arguably a value play, as it carries trailing and forward P/Es of 12 and 10 respectively. Results have also been decent recently, as in its most recent quarter revenue grew 5% compared to the same period in the previous fiscal year with earnings growth being considerably higher than that figure. Platinum Asset Management, managed by billionaire Kerr Neilson, owned almost 13 million shares of Cisco Systems, Inc. (NASDAQ:CSCO) at the beginning of January (find Neilson’s favorite stocks).
Who’s the best of the rest?
Fisher reported a position of just over 30 million shares in General Electric Company (NYSE:GE) at the end of March. General Electric Company (NYSE:GE) is another company which analysts are expecting to improve considerably over the next couple years in terms of EPS: it is valued at 13 times consensus earnings for 2014, a multiple a good bit below the trailing P/E. Earnings did well in the first quarter of 2013 versus a year earlier, but revenue was actually flat and so we’d be skeptical that the company can sustain a similar level of growth on the bottom line. Billionaire David Shaw’s D.E. Shaw increased its stake in GE by 35% during the fourth quarter of 2012.
The fund disclosed ownership of about 18 million shares of Wells Fargo & Co (NYSE:WFC). While many large banks are trading at the book value of their equity or even at discounts to that figure, Wells Fargo & Co (NYSE:WFC) carries a P/B ratio of 1.4. However, the bank has done better than its peers at converting its assets into earnings; as a result, its trailing and forward earnings multiples are in the 10-11 range, about even with where peers such as Citigroup or Bank of America are trading. Warren Buffett’s Berkshire Hathaway is a major investor in Wells Fargo (see Buffett’s stock picks).
Disclosure: I own no shares of any stocks mentioned in this article.
