Billionaire Ken Fisher’s Top 10 Stock Picks

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.

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.

Giverny Capital Asset Management LLC claims that Alphabet needs to be disciplined in its spending. Here is what Giverny Capital Asset Management stated in an investors letter:

“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.

First Eagle Investment Management claims that Taiwan Semiconductor is set to expand its market share in the days ahead. Here is what First Eagle Investment Management stated in an investors letter:

“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.”

5. Vanguard Intermediate-Term Corporate Bond Index ETF

Ken Fisher’s position in Vanguard Intermediate-Term Corporate Bond Index ETF underperformed compared to the broader market index. This is because of pandemic related financial challenges and lower interest rate. Vanguard Intermediate-Term Corporate Bond Index ETF is the fifth-largest holding of the Fisher Asset Management portfolio.

On the positive side, the firm has received hefty dividends from its investment. Vanguard Intermediate-Term Corporate Bond Index ETF offers a monthly dividend. Its dividend yield is hovering around 2.75%. We prefer high dividend stocks to bond ETFs as dividend stocks are likely to appreciate in value over the years.

4. Visa Inc (NYSE: V)

The second-worst performer among its top ten positions is payment technology company Visa Inc (NYSE: V). Shares of Visa are up only 2% in the last twelve months. The pandemic related traveling restrictions has significantly impacted its share price and financial numbers in 2020. However, the stock has been recovering over the last couple of months amid hopes over the resumption of travel and tourism activities.

Qualivian Investment Partners, which generated 9.1% on a gross and net basis versus the S&P’s 8.93% in the third quarter, claimed in an investor’s letter that Visa is a smart long term investment. Here is what Qualivian Investment Partners stated:

“Visa: was a positive contributor in the quarter, just less so than our other holdings. Visa’s fiscal Q4 quarter (calendar Q3) results were better-than-expected as revenue and EPS beat street expectations driven by stabilizing domestic transaction volumes and good expense control. Although results showed continued pressures from depressed crossborder volumes, which may continue for the foreseeable future as with MA, we believe the worst is behind us and our long-term thesis of V’s structural positioning on the other side of the pandemic remains intact. Looking to the back half of 2021 and going into 2022, we see a recovery in cross-border activity, which together with traditional spending improvements at the POS, leaves considerable room for upside upon reopening. Further, once the macro normalizes (medium term), we believe V (and MA) will continue to benefit from structural drivers including increased contactless payments, more eCommerce transactions, as well as a lift in the value-added services like fraud/gateway/marketing services, and demand for other flows such as B2B, G2C and use of Visa Direct. There is no credible competition on the horizon for the Visa/Mastercard payment networks.”

3. Microsoft Corporation (NASDAQ: MSFT)

Fisher Asset Management has been holding a position in Microsoft Corporation (NASDAQ: MSFT) over the years. It is the third-largest stock holding of Ken Fisher’s 13F portfolio and the firm has benefited from its position. Shares of Microsoft soared close to 31% in the past twelve months and the company has also raised its dividends by 9.8% for 2021.

Blue Hawk Investment Group, which returned 7.48% for the Q4 of 2020, stated in an investor’s letter that its Microsoft position helped in generating returns. Here is what Blue Hawk Investment stated:

“Our top contributors in 2020 came from the long book, led by three of our core holdings. Microsoft round out the top five. The stock we have held since the inception of the fund, buying Microsoft at $62 originally in early 2017. A 3.5x return respectively over the four-year period.”

Schroder Investment Management talked in detail about MSFT in its Q4 investor letter.

2. Amazon.com (NASDAQ: AMZN)

The largest e-commerce platform saw a stunning share price rally in the last twelve months and Fisher Asset Management is among the beneficiaries of the bull-run. AMZN is the second-largest stock holding of Ken Fisher’s 13F portfolio, accounting for 4.31% of the portfolio. Shares of AMZN grew around 59% over the last twelve months.

L1 Capital is bullish on Amazon and believes that Amazon is the best pick for 2021. Here is what L1 Capital stated in an investors letter:

“Several investments in the technology sector were trimmed on valuation grounds with the proceeds used to increase our investment in Amazon. Amazon’s successful flywheel business model and Amazon Web Services are well known. However, we believe the current share price under‑appreciates:

– The consistency and longevity of Amazon’s growth potential in its key businesses;

– The importance of additional revenue streams such as advertising which are high margin and growing rapidly; and

– The strengthening barriers to competition and competitive advantages arising from Amazon’s stepped‑up investment in logistics and other infrastructure.”

The Seattle, Washington-based company just had an amazing quarter. The company reported strong financial results for the fourth quarter, helped by record online sales driven by the pandemic. Amazon reported earnings of $7.2 billion, or $14.09 per share for the three months ended Dec. 30, representing a surge of more than two-folds from $3.3 billion, or $6.47 per share in the comparable period of 2019. Analysts on average were expecting the company to report a profit of $7.34 per share.

Revenue jumped 44 percent on a year-over-year basis to $125.6 billion, easily beating the consensus forecast of $119.7 billion. This was the first time that Amazon’s total sales crossed $100 billion in a quarter, thanks to the tremendous demand driven by the pandemic.

1. Apple (NASDAQ: AAPL)

The tech giant Apple (NASDAQ: AAPL) is the largest stock holding of Ken Fisher’s portfolio. The firm held 61.2 million shares of Apple at the end of the fourth quarter. Apple stock price rose 71% in the last twelve months while the company offers a dividend yield of 0.61%.

Alger Spectra Fund highlighted few stocks including Apple in an investor’s letter. Here is what Alger Spectra Fund stated:

“Apple is a leading technology provider in telecommunications, computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. This tight engagement is facilitating significant growth in high-margin services like streaming music apps and Apple Pay. Apple’s continued development of high-margin services and earnings streams for wearable devices as well as the potential contribution of 5G phones to the company’s growth supported the performance of Apple shares.”

Please also see 14 Best Low-Risk Stocks to Buy Right Now and 10 Best High Yield Stocks To Buy Now.