In this article, we examined billionaire Ken Fisher’s top 10 stock picks to see how these stocks performed in 2020 and what the future prospects are. Click to skip ahead and see Billionaire Ken Fisher’s Top 5 Stock Picks.
Billionaire Ken Fisher’s strategy of investing in high growth stocks paid off in 2020 as his 8 out of the top ten positions outperformed the broader market index. Indeed, the majority of his top 25 positions generated better performance than the S&P 500 index in 2020, thanks to investments in information technology, financial services, and consumer discretionary stocks. His investment firm has also been holding positions in fast-growing companies from the healthcare and communications sectors.
In addition to investing in the fastest-growing companies, the firm also likes to buy depressed stocks that have strong fundamentals. The firm believes in the demand and supply idea when it comes to pricing any stock. Fisher Asset Management, which is employing several teams of research analysts for finding the best investment opportunities, created positions in 118 stocks during the fourth quarter.
In addition, the firm likes to hold a stake for the long-term to benefit from share price gains and dividends. Billionaire Ken Fisher’s asset management firm added to its 388 existing positions during the fourth quarter.
The average time held for the top ten stocks stands around 11.6 quarters while the time held for the top 20 stocks averages around 13.65 quarters.
Billionaire Ken Fisher sold out 48 stocks during the fourth quarter of 2020 and reduced his positions in 378 stocks. Overall, the firm held a position in 957 stocks, according to the latest 13F filings.
Ken Fisher of Fisher Asset Management
Founded in 1979 and incorporated in 1986, Fisher Asset Management ended the fourth quarter with $133 billion in 13F portfolio market value, up significantly from $114 billion in the previous quarter and $98 billion at the end of fiscal 2019. Ken Fisher is the heart and soul of Fisher Asset Management and currently serving as the executive chairman and co-chief investment officer. He is the son of legendary investor Philip A. Fisher. Ken Fisher is also a columnist and author. He has written several books on finance.
While Ken Fisher’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 111 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start examining billionaire Ken Fisher’s top ten stock picks to determine returns in 2020 and what are the future prospects of these positions. Its top ten stock holdings account for almost 32% of the overall portfolio.
10. Salesforce.com, Inc. (NYSE: CRM)
The customer relationship software developer Salesforce.com (NYSE: CRM) is the tenth-largest stock holding of Fisher Asset Management. The firm has benefited from its large position because shares of CRM rallied almost 28% in the last twelve months compared to the S&P 500 growth of almost 17%.
Alger Spectra Fund also believes that Salesforce is a good stock to buy and hold for the long-term. Here is what Alger Spectra Fund stated in an investors letter:
“Salesforce.com is a leading software-as-a-service company with turnkey salesforce productivity and customer relationship management applications as well as a cloud-based development environment. Increased spending on technology by corporations digitizing their business models supported the performance of salesforce.com shares. We believe the return on investment (ROI) from deploying salesforce.com technology is compelling because the company’s products make enterprises more productive and profitable while fostering growth. This attractive ROI has resulted in the company’s continuing high unit volume growth.”
Polen Capital also talked about CRM in its Q4 investor letter:
“We discussed Salesforce.com in the third quarter, but the former went from our top contributor last quarter to the largest detractor this quarter. The double-digit share price decline in the quarter seemed mostly driven by investor reaction after Salesforce announced it would acquire Slack, a collaboration software company, for approximately $28 billion, a high purchase price. While the purchase price is higher than we expected, we believe Slack and its functionality fit well strategically with Salesforce’s suite of enterprise software offerings. At a high-level, Slack offers the ability to make both Salesforce’s and other third-party applications work better for their respective customers. In addition, Salesforce’s world-class selling organization and already large customer base should be beneficial for Slack’s subscription revenue growth, which has been more customer-referral based up to this point. It is too early to know if this acquisition will prove to be a smart allocation of investor capital. That said, Slack has a unique value proposition and was growing nicely on a standalone basis. We believe the Salesforce-Slack strategic vision is on point; and although the purchase price is high in absolute dollars, it represents less than 15% of Salesforce’s market capitalization.
We maintain an optimistic view of Salesforce’s business, its competitive positioning within enterprise software, and the rationale behind the Slack acquisition. We expect strong, continued earnings and free cash flow growth many years into the future.”
9. Adobe Inc. (NASDAQ: ADBE)
Billionaire Ken Fisher’s strategy of holding a position in Adobe (NASDAQ: ADBE) has also added to its performance in 2020. Shares of Adobe rallied 34% in the last twelve months, thanks to strong demand for its products. It is the ninth-largest stock holding of Fisher Asset Management, accounting for 2.18% of the overall portfolio.
Nelson Roberts Investment Advisors stated in an investor’s letter that Adobe is likely to perform well despite pandemic related challenges. Here is what Nelson Roberts Investment Advisors said:
“We purchased Adobe, the leading provider of content creation software. Adobe is a software company with a recurring revenue stream, which should insulate it from some of the negative effects of the COVID-19 outbreak.”
Polen Capital also talked about ADBE in its Q4 investor letter:
“Adobe has been a strong performer since our initial purchase in early 2016 and has since compounded annually over 40%. This year has been no exception, with the business performing superbly and the stock appreciating by over 50%. CEO Shantanu Narayen stated, “This reality has created new tailwinds for Adobe.” In addition to consistent and recurring double digit revenue growth, its margin expansion has significantly boosted its earnings power. Non-GAAP operating margins have expanded by over 550 bps in the past year. At the same time, we also believe that CEO Narayen deserves more credit for his capital allocation prowess. He has made sound acquisitions that have boosted the value proposition of his company’s products while strengthening the competitive advantages of the business.”
8. Alphabet (NASDAQ: GOOGL)
Shares of Alphabet (NASDAQ: GOOGL) surged almost 40% in the last twelve months on the back of increasing demand for digital ads. It is the eighth largest stock holding of Fisher Asset Management’s 13F portfolio, accounting for 2.19% of the overall portfolio.
“Alphabet is our largest holding. We’re biased, but we’d argue that Alphabet is reasonably priced. It earns significant profit from travel-related searches, which are way down this year. Travel spending figures to roar back at some point, possibly soon. Alphabet also spends extravagant amounts on R&D and capital spending as it finances younger ventures. Those other businesses, which include YouTube, Waymo self-driving cars and cloud computing centers, plus research in artificial intelligence, should eventually generate meaningful returns for shareholders. Or at worst, they will consume less investment over time. If Alphabet simply exercises discipline over investment spending for a few years as travel advertising rebounds and the core search business grows, the resulting free cash flow should generate satisfactory returns for owners.”
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
The chipmaker Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is one of the best performing stock holding of Fisher Asset Management. This is because shares of TSM jumped 135% in the last twelve months. In addition, the firm has also been bagging big dividends from Taiwan Semiconductor. The company offers a dividend yield of 1.31% despite strong share price gains in the last twelve months.
“Shares of Taiwan Semiconductor (TSMC) traded higher during the quarter on signs that its total addressable market was poised to expand. Intel announced that it was facing delays in the manufacture of its next-generation chips and may contract out the work to third parties, opening the door for a large-scale chip “foundry” like TSMC to pick up some of the business. Foundries make chips designed and named by other companies; TSMC already produces certain chips for Intel.”
6. Alibaba Group Holding Limited (NYSE: BABA)
Despite concerns over regulatory issues, Alibaba Group Holding Limited (NYSE: BABA) stock price managed to outperform the broader market index. Shares of Alibaba are up 21% in the past twelve months, meaning Fisher Asset Management has benefited from its stake. It is the sixth-largest stock holding of Fisher Asset Management, accounting for 2.43% of the overall portfolio.
Polen Capital Management, a value-driven, concentrated, long-term investment management firm, highlighted few stocks including Alibaba in an investor’s letter. Here is what Polen Capital Management stated:
“One of our largest detractors during the quarter was Alibaba Group Holding Limited. Alibaba Group’s stock declined by over 20% during the fourth quarter. China delayed the Ant Financial initial public offering (IPO) and launched an anti-trust investigation into alleged anti-competitive practices by Alibaba. Many speculate that this was a strong signal from the government in response to comments made by Alibaba founder Jack Ma.
Regardless of the reason, while we acknowledge that operating in China is different than in the U.S., we also recognize Alibaba’s dominance and importance to China’s long-term goals. As China reorients its economy from export-driven to domestic consumption, Alibaba’s platforms—Taobao and Tmall—are arguably the very best tools to achieve this. Alibaba enables commerce throughout the country from tier-one cities to rural areas. Its competitive advantages, tailwinds in digital payments, e-commerce, and cloud technologies are poised for continued growth even with potential government penalties in the future. It remains one of our highest conviction positions.”
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Disclosure: No position. The article Billionaire Ken Fisher’s Top 10 Stock Picks is originally published on Insider Monkey.