Billionaire Ken Fisher's Top Small-Cap Picks

by: Insider Monkey

By: Alex Oleinic

Ken Fisher oversees an equity portfolio worth more than $40 billion, according to Fisher Asset Management's latest 13F. And while the firm's top holdings involve companies like Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ) and American Express (NYSE:AXP) among others, we should not ignore the smaller names as well. Due to the fact that the smart money's favorite small-cap picks represent the best investment opportunities (learn why here), let's take a look at Fisher's top five holdings in this space.

Parexel International

Parexel International (NASDAQ:PRXL) is Ken Fisher's largest small-cap. His firm owns around 2.6 million shares of the biotech and medical research company, worth an aggregate value of $132 million. At the beginning of this month, two analysts increased their targets for Parexel. ISI Group upgraded it from "Neutral" to "Buy," setting its PT to $57 from $52.5, while Sterne Agee raised its PT to $51.07 from $36. Shares of Parexel have climbed over 6% since the first upgrade, and fellow mega-investors Chuck Royce and Jim Simons are both bullish as well.

SVB Financial

SVB Financial Group (NASDAQ:SIVB) comes next, with Fisher disclosing a $128.3 million stake that amasses around 1.5 million shares of the company. Shares of SVB Financial, with a market cap of $4.3 billion, have returned 70% since the beginning of the year. The financial services company provides commercial banking services through its Silicon Valley Bank, which has strong credit ratings of A2 and A- at Moody's (NYSE:MCO) and Standard & Poor's; both agencies hold stable outlooks on the company. SVB Financial also posted secure results in the second quarter of the year, with net income of $48.6 million, up 12% year-over-year. The sell-side expects long-term annual earnings growth to range between 10% and 11% over the next half-decade.

Domino's Pizza

Another small-cap in Fisher's equity portfolio is Domino's Pizza (NYSE:DPZ), with a stake of $126.2 million. Recently, the pizza delivery company posted its results for the third quarter, showing an EPS boost of 19% over the year, but this number missed estimates ever so slightly. Nonetheless, Domino's board declared a dividend of $0.2 per share for the quarter, and shares are up 52% year-to-date. At 23 times forward earnings, Domino's is fairly valued, so it appears that Fisher is here for the growth prospects.


Fisher also owns shares of the $4.3 billion market cap outdoor retailer Cabela's (NYSE:CAB). Fisher Asset Management disclosed ownership of some 2.0 million shares of the company in the third quarter, with an aggregate value of $123.6 million. Fisher has held this stock for more than three years (as far back as we track him), and it has rewarded him well; shares of Cabela's are up more than 300% since the beginning of 2010. Cabela's plans to open around 1 million square feet of new retail stores per year beginning this year, which amounts to approximately 14 stores annually.

Fifth & Pacific

Fifth & Pacific Companies (FNP) is last but certainly not least. Fisher reported that he holds 4.4 million shares of the company worth a total value of $108.9 million. He's the second largest prominent investor in Fifth & Pacific of the funds we track, second to Alexander Mitchell and Scopus Asset Management. At the beginning of October, Fifth & Pacific, which holds a portfolio of premium retail brands, agreed to sell the intellectual property of its Juicy Couture brand to Authentic Brands Group. The transaction amounts to $195 million and is supposed to close in November.

Fifth & Pacific also signed a short-term licensing agreement with Authentic Brands, which will allow the former to transition its business in an orderly fashion during the first half of 2014, with $10 million worth of guaranteed minimum royalties payable to Authentic Brands. Shares of Fifth & Pacific went up by 5% on the day of the announcement earlier this month, and are up another 2% since then.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: This article is written by Insider Monkey's writer, Alex Oleinic, and edited by Jake Mann. They don't have any business relationships with any of the companies mentioned in this article and they didn't receive compensation (other than from Insider Monkey and Seeking Alpha) to write this article.