Ken Fisher is one of the longest running columnists at Forbes – over 26 years – and is also a billionaire fund manager. Fisher founded Fisher Investment Management in 1979 and uses a global, top-down, dynamic asset allocation strategy. In looking at Fisher’s most recent quarterly 13F filing – which reveals the majority of the public securities owned by the firm – we have identified a key underlying theme: he has an affinity for tech stocks (check out all of Ken Fisher's latest bets here).
Fisher's top tech stock is Cisco Systems, Inc. (NASDAQ:CSCO), which is his 5th largest 13F holding. Cisco is expected to see improvement in the U.S. and Asia on new products, including expansion into cloud software. Despite its hopeful market growth in the Far East, Cisco plans to use acquisitions as a key growth avenue, including a recent $6 million investment into a venture capital fund.
Although Cisco’s overall expected growth is less than stellar, it remains one of the better value plays with a $6 billion software business that is expected to grow by 100% over the next three years. Cisco trades at only 13x earnings, below other top tech companies like Oracle (16x) and SAP (22x). Cisco also trades at only 9.5x forward earnings, one of the lowest multiples amongst Fisher’s five tech stocks. Billionaire and founder of Renaissance Technologies Jim Simons is another top fund owner of Cisco after taking a new position last quarter (see Jim Simons' top picks).
Apple Inc. (NASDAQ:AAPL) made up Fisher’s 10th largest 13F holding after his firm increased their stake almost 1,000% last quarter. Despite market saturation concerns, Apple is still expected to continue its industry leading sales growth. Revenues should be up 25% in fiscal year 2013 following a robust holiday season that includes new iPhone and iPad products. Margins are also expected to expand as iPhones and iPads continue to grow their scale, and production becomes more efficient.
Apple has robust cash flow generating capabilities, having built up over $45 billion in cash that can easily fund its 2% dividend yield or key acquisitions. Compared to Fisher’s other tech stocks and other tech hardware companies, Apple Inc. (NASDAQ:AAPL) is one of the cheapest in the business. The tech giant trades at only 9x forward earnings and has one of the best long-term expected EPS growth rates (21%). This puts Apple’s PEG ratio at 0.5, making it a deep value-oriented investment opportunity.