We track 13F filings from hedge funds and other notable investors, which disclose many of their long equity positions as of the end of the previous quarter, for a variety of purposes. For one, we research investment strategies which can be applied based on the information found in 13Fs. We have found, for example, that the most popular small cap stocks among hedge funds generate an average excess return of 18 percentage points per year (learn more about our small cap strategy). Many investors like to use 13Fs as a way to find stock ideas for further research, and so we also provide a brief analysis of many filers’ top picks in a number of categories including “traditional value stocks” as measured by price-to-earnings multiples. Here are the five of the largest holdings from billionaire Ken Fisher’s Fisher Asset Management (find more of Fisher’s favorite stocks) which have both trailing and forward P/Es of 15 or lower:
In a piece for Forbes magazine (where Fisher works as a columnist) he named Pfizer Inc. (NYSE:PFE) his top stock pick for 2013. The megacap drug manufacturer was also his fund’s largest single-stock position at nearly 32 million shares. Pfizer, as it happens, was the most popular healthcare stock among hedge funds in the fourth quarter of 2012 as well (see more healthcare stocks hedge funds loved). The stock trades at 14 times trailing earnings, with analysts expecting growth in net income over the next couple years. Pfizer also pays a substantial dividend yield, at 3.5% going by current prices and recent payments.
Here are three more stocks Fisher owns, including two big banks:
Wells Fargo & Co (NYSE:WFC) was another of Fisher’s stock picks with the filing disclosing ownership of close to 19 million shares. Wells Fargo, of course, is now Warren Buffett’s largest publicly traded stock position by market value after Berkshire Hathaway added shares last quarter (research more stocks Buffett is buying). While the bank doesn’t look like a good value in terms of its book- the stock’s P/B ratio is 1.3- in earnings terms it is indeed a cheap stock as its trailing and forward P/Es are close to 10. That is in line with where other large banks are currently trading.
According to the 13F Fisher had 3.3 million shares of International Business Machines Corp. (NYSE:IBM) in its portfolio at the beginning of January. IBM carries trailing and forward earnings multiples of 14 and 11, respectively. The company did manage 6% earnings growth in the fourth quarter of 2012 versus a year earlier, and essentially flat revenue. As it happens IBM is another Buffett favorite; another large position in the stock is held by billionaire David Shaw’s D.E. Shaw, which owned 2.3 million shares according to its own filing (see more stocks D.E. Shaw owns).
The fund reduced its stake in JPMorgan Chase & Co. (NYSE:JPM) between October and December but still owned about 12 million shares at the close of 2012. JPMorgan Chase is generally thought of as a less stable bank than Wells Fargo, though it also trades at a discount to that peer: its trailing earnings multiple is 10 and the stock is priced right about at the book value of its equity rather than a significant premium. Highfields Capital Management, managed by Jonathon Jacobson, reported a position of 6.8 million shares in JPMorgan Chase though that fund had been selling the stock as well.
Disclosure: I own no shares of any stocks mentioned in this article.
