We recently compiled a list of the Billionaire Ken Fisher’s Top 15 Stock Picks Heading Into 2025. In this article, we are going to take a look at where Caterpillar Inc. (NYSE:CAT) stands against Ken Fisher’s other top stock picks.
Ken Fisher is the founder of Fisher Asset Management, a financial adviser that he started nearly five decades ago. The firm oversees over $240 billion from more than 150,000 private investors.
Fisher said, “I’ve gone to cash three times in my career; in 1987 before the crash, before the 1990 bear market and in the early 2000s, before the dot-com crash. But I missed the 2007-2009 bear market because I didn’t believe, and don’t believe, mortgages could cause what they are blamed for having caused.”
Besides focusing on long-term investments, Fisher also believes in spreading out investments to reduce risk. Fisher Asset Management is highly diversified, with a portfolio value of about $244 billion. While technology stocks account for 31.8% of the portfolio, the independent money management firm is also heavily invested in the services sector, accounting for 14.6% of the portfolio. Other significant holdings are in the financial services, healthcare, and basic materials sectors.
In the past year, Fisher’s firm made a 32.18% return, mainly because it invested a lot in tech stocks, especially those benefiting from the AI boom. While other managers are selling tech stocks due to high valuations, Fisher’s firm is buying more, especially in companies making AI chips.
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Even though the overall market is at all-time highs, Fisher says there’s no need to worry. He believes that just because the market is high now, it doesn’t predict the future. He expects the market to keep going up as long as the economy and other key factors get better.
“Bull markets hit new highs on an ongoing basis as soon as they have recovered from the prior bear market and hit their first all-time high in that new bull market. They keep doing that over and over again and eventually you do get another bear market and then again get another bull market. Bull markets, not always, are usually significantly bigger and longer than bear markets, significantly,” Ken Fisher said.
Ken Fisher’s portfolio is heavily invested in the “magnificent seven” stocks, based on the belief that the stocks are well poised to continue outperforming the overall market. According to Fisher, growth stocks will continue outperforming value stocks amid the prevailing economic conditions.
“If you think the market is going up, you should expect the magnificent seven to continue to do well. Will they necessarily do better than everything? No, but they never actually did. The fact is they did better as a group than most groups you could find. I think that will continue to be the case because I am optimistic on the market as a whole moving forward”, Fisher said in a video interview.
Our Methodology
We looked through Fisher Asset Management’s portfolio to find Ken Fisher’s top 15 stock picks for 2025. We focused on his biggest investments and ranked the stocks from smallest to largest based on the firm’s stake at the end of Q3 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A construction crew operating a hydraulic shovel during a nighttime project.
Caterpillar Inc. (NYSE:CAT)
Fisher Asset Management’s Investment Equity Stake: $3.50 Billion
Number of Hedge Funds Holding Stakes: 50
Caterpillar Inc. (NYSE:CAT) makes locomotives, power solutions, and heavy machinery. It’s the largest heavy equipment maker in the world. Its products are sold by 160 dealers in over 2,700 locations worldwide. The stock is up by more than 38% for the year, attributed to a period of robust performance of the industrial behemoth.
Caterpillar Inc. (NYSE:CAT) aims to strengthen its product line, incorporate sustainability, and lead in pricing and innovation for long-term profit growth. On November 7, 2024, Caterpillar Inc. (NYSE:CAT) announced it successfully tested its fully autonomous Cat® 777 truck at Luck Stone’s Bull Run plant in Virginia. This is a big step in providing autonomous hauling for quarries and aggregates. It also shows progress in its partnership with Luck Stone.
While the global economy has been under pressure amid the high interest rate environment, Caterpillar’s core business has remained resilient. The company delivered solid third-quarter results on October 30, 2024. Revenue logged in at $16.78 billion as adjusted earnings per share came in at $5.17.
Caterpillar Inc. (NYSE:CAT)’s capital allocation strategy demonstrates its commitment to returning value. The company has increased dividends in each of the last 30 years, maintaining an impressive 91-year dividend streak. The stock yields 1.40% in dividends, affirming why it is one of billionaire Ken Fisher’s top 15 stock picks heading into 2025 for passive income.
Here is what Diamond Hill Large Cap Strategy said about Caterpillar Inc. (NYSE:CAT) in its Q3 2024 investor letter:
“Other top Q3 contributors included HCA Healthcare and Caterpillar Inc. (NYSE:CAT). Heavy construction machinery manufacturer Caterpillar has held up better than industry peers against a challenging macroeconomic backdrop and a generally slowing construction environment.”
Overall CAT ranks 14th on our list of Ken Fisher’s top stock picks heading into 2025. While we acknowledge the potential of CAT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.