In this article, we discussed billionaire Ken Fisher’s 10 new stock picks to see how these stocks performed so far in 2021. Click to skip ahead and see Billionaire Ken Fisher’s 5 New Stock Picks.
Ken Fisher has extended his strategy of investing in high growth stocks in information technology, communications, and consumer discretionary sectors. This strategy has helped in generating strong returns in 2020 as the majority of its top 25 stock holdings outperformed the broader market index by a wide margin. Moreover, the firm has added to its 24 out of 25 top positions during the fourth quarter. It also appears that the hedge fund has been lowering its focus on the finance sector over the past two years. Investments in financial sectors, which accounted for around 35% of the overall 13F portfolio from 2016 to 2018, now represent only 19% of the portfolio.
Information technology was the top-performing sector in 2020 as stay-at-home policies helped in generating robust demand for tech products and services. The sector is up 36% in the last twelve months, thanks to a strong rally from software services and semiconductor stocks. Moreover, the expectations for double-digit revenue and earnings growth are backing the tech stock’s upside momentum in 2021.
Ken Fisher of Fisher Asset Management
In addition to gains from share price appreciation, Fisher Asset Management has also been benefiting from dividends. The firm likes to hold a stake for the long term instead of taking advantage of the short-term price movements. The average time held for the top ten stocks stands at around 11.6 quarters while the time held for the top 20 stocks averages around 13.65 quarters.
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. Between March 2017 and February 5th 2021 our monthly newsletter’s stock picks returned 187.5%, vs. 75.8% for the SPY. Our stock picks outperformed the market by more than 111 percentage points. (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 new stock picks in the fourth quarter of 2020 to determine whether these stocks have the ability to outperform the broader market returns and help Fisher Asset Management in beating the market trends in 2021. Billionaire Ken Fisher’s asset management has created new positions in 118 stocks during the fourth quarter.
10. Parker-Hannifin Corporation (NYSE: PH)
The manufacturer and seller of motion and control technologies Parker-Hannifin Corporation (NYSE: PH) is the new stock pick of Ken Fisher’s hedge fund. PH has outperformed the S&P 500 returns in the last twelve months and it appears that strong earnings guidance for 2021 would fuel more share price growth. Moreover, the company also offers a hefty dividend to shareholders and its dividend yield currently averages around 1.27%.
The company expects 2021 earnings per share in the range of $13.65 to $14.15 on an adjusted basis compared to previous guidance for $11.90 to $12.40.
9. Matador Resources Company (NYSE: MTDR)
Billionaire Ken Fisher’s strategy of picking oil and gas exploration and production player Matador Resources Company (NYSE: MTDR) worked for the hedge fund. This is because shares of MTDR rallied 161% in the last three months, thanks to improving oil prices. The hedge fund has bought 102,156 shares of Matador Resources Company during the fourth quarter
FAM Funds, which returned 10.10% for 2020, highlighted few stocks including Matador Resources in an investor letter. Here’s what FAM Funds stated:
“In June, after a decent rebound from the downturn’s scariest moments, we sold our shares in our lone energy holding, Matador Resources (MTDR). The sale of MTDR deserves an explanation. We have long been cautious about investing in oil due to the massive commodity price swings. However, we were so impressed by MTDR’s leadership that we held a modest-sized position. Clearly, the swings in 2020’s commodity prices overruled the firm’s management team despite their strength. The huge drop in demand due to COVID and squabbling among the major oil producers triggered a huge price drop. We did not panic-sell at the bottom, but did exit once prices began rebounding.”
8. Pentair (NYSE: PNR)
The smart water solutions provider Pentair (NYSE: PNR) has also gained Ken Fisher’s confidence in the fourth quarter. The hedge fund has created a small stake in Pentair by purchasing 27,866 shares. PNR share price managed to beat the S&P 500 index in the last twelve months. The company is also well known for offering increasing dividends to investors. Pentair has raised dividends in the past 45 successive years.
Its December quarter revenue grew at a mid-single-digit rate while cost-saving strategies helped in beating the Wall Street consensus for earnings per share. The company now expects 2021 earnings per share in the range of $2.43 to $2.58.
7. Advanced Drainage Systems, Inc. (NYSE: WMS)
The building products provider Advanced Drainage Systems, Inc. (NYSE: WMS) is also a newcomer in the Fisher Asset Management portfolio. It appears that Ken Fisher’s stock-picking strategy also worked in the case of Advanced Drainage because its shares rallied 19% since the beginning of this year, extending the twelve months gains to more than 100%.
The share price gains are fully backed by robust financial numbers. The company has generated 23% year-over-year revenue growth in the latest quarter while net income increased by 128.4% to $54.0 million from the year-ago period.
6. Aptiv PLC (NYSE: APTV)
Billionaire Ken Fisher picked Aptiv PLC (NYSE: APTV) stock during the fourth quarter. Shares of Aptiv rallied close to 43% since the beginning of this year compared to the S&P 500 growth of 11%. Aptiv manufacturers, and sells vehicle components worldwide. Its share price growth is backed by strong financial numbers. The company posted 16.9% year-over-year revenue growth in the latest quarter.
American Century, which reported a negative 16% return for the first quarter of 2020, stated that Aptiv will benefit from electrification in the long-term. Here is what American Century said in an investor letter:
“Aptiv. Automotive plant closures resulting from self-quarantines and stay-at-home directives weighed on automotive parts and technology firm Aptiv. We continue to believe that Aptiv is well-positioned to benefit from durable growth themes such as electrification and autonomous driving.”
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