Although chances of outperforming the wider market by emulating hedge fund picks is quite unlikely, odds increase when you focus on small-cap companies ($1 billion-$5billion market cap, approximately). This is why in this article we will look into Ken Fisher’s Fisher Asset Management’s small-cap stock picks for the last reported quarter.
SVB Financial Group (NASDAQ:SIVB) is a $5.2 billion market cap financial services, bank holding and financial holding company that has Ken Fisher as its largest hedge fund shareholder, even though he last declared having trimmed his exposure to the company by 2%. His fund owns 1.42 million shares of SVB Financial Group (NASDAQ:SIVB), worth more than $183 million.
Other funds that have been profiting from the 8% increase that the stock price has seen since the beginning of the year are Robert Pohly’s Samlyn Capital, which owns 292,640 shares of SVB Financial Group (NASDAQ:SIVB), and John Brennan’s Sirios Capital Management, which last disclosed having more than doubled its stake in the company, to 125,267 shares.
Second in this list is Waddell & Reed Financial, Inc. (NYSE:WDR), a $5.3 billion market cap investment management, investment product underwriting and distribution, and shareholder services administration company, which also has Mr. Fisher as its largest hedge fund investor. Fisher Asset Management last disclosed ownership of 2.18 million shares of Waddell & Reed Financial, Inc. (NYSE:WDR), worth more than $160 million by the end of Q1. The stock price has plunged 13% since, providing an attractive entry point for investors; the stock currently trades at 19.7 times the company’s earnings.
Addition hedge fund support at Waddell & Reed Financial, Inc. (NYSE:WDR) comes from Chuck Royce and Mario Gabelli, who own 536,237 shares and 384,250 shares, respectively.
PAREXEL International Corporation (NASDAQ:PRXL) came in third. Although this $3 billion market cap biopharmaceutical company saw Fisher Asset Management decrease its exposure by 2% over the last reported quarter, the fund is –still, and once a again- the largest hedge fund stockholder. Its 2.53 million shares of PAREXEL International Corporation (NASDAQ:PRXL) are worth more than $137 million, after escalating more than 17%, year-to-date.
Just like in the previous case, Chuck Royce can be counted amongst PAREXEL International Corporation (NASDAQ:PRXL)’s institutional supporters, holding 455,000 shares. Meanwhile, Jim Simons last declared possession of 645,300 shares.
Fourth in line is Domino’s Pizza, Inc. (NYSE:DPZ), a $4.1 billion market cap restaurant operator you probably know already. In this case, Mr. Fisher’s 1.76 million shares do not make him the largest hedge fund investor. Andy Brown’s Cedar Rock Capital owns about 4.19 million shares, worth more than $323 million, while Jim Simons holds 3.23 million shares of Domino’s Pizza, Inc. (NYSE:DPZ).
Domino’s Pizza, Inc. (NYSE:DPZ)’s stock is up only 5.4% year-to-date, and trading around industry average valuations, at 28.4 times the company’s earnings. However, its growth history, margins and returns on assets make of this stock an interesting investment option.
Finally, there’s Finisar Corporation (NASDAQ:FNSR) –no pun intended. This $1.9 billion market cap provider of optical subsystems and components saw Mr. Griffin cut its position by 2% over Q1; however, he remains the largest hedge fund shareholder at Finisar Corporation (NASDAQ:FNSR) –amongst those we track, with 4.39 million shares, worth about $116 million. Another fund with big bets on the company is Ken Griffin’s Citadel Investment Group, which owns 2.62 million shares.
Finisar Corporation (NASDAQ:FNSR)’s stock price fell about 19% over the past month. This certainly opens an attractive entry point for investors who wish to acquire this stock at a low valuation -19.2x P/E, compared to an industry average of 40x P/E.
Disclosure: Javier Hasse holds no position in any stocks or funds mentioned.
