By Matt Doiron
Ken Fisher is one of the 400 richest people in the United States, drawing his wealth from his books on money management and from his work at Fisher Asset Management. The large fund recently filed its 13F for the second quarter of 2012 with the SEC. Fisher Asset Management doesn't recommend or endorse any of the stocks or analysis in this article, and we have no relationship with the fund, but based on SEC filings, these are our opinions of what they are thinking. Read on to see the fund's largest reported positions or compare them to previous portfolio filings.
Fisher's top stock holding according to the 13F was Johnson & Johnson (JNJ), the $190 billion market cap consumer and pharmaceutical healthcare business. Fisher had owned 10.8 million shares of Johnson & Johnson at the beginning of April and over the course of the second quarter dropped this number slightly to 10.7 million. Johnson & Johnson is protected from economic weakness with a beta of 0.5, though its trailing price-to-earnings ratio of 22 is a bit high for it to be considered a value stock. The company pays a 3.5% dividend yield and is also notable for being a favorite stock of Warren Buffett and hedge funds.
Giant conglomerate General Electric Company (GE) also pays a solid dividend yield of 3.3%. There were 30.6 million shares of GE in Fisher's portfolio at the end of March, and this was increased to 31.3 million by the end of June. Combining this with a 4% rise in the stock price make GE the second largest stock position for the fund according to its filing. GE saw its revenue and earnings decline in its most recent quarter compared to the previous year, but it currently trades at reasonable P/E multiples of 18 on a trailing basis and 12 on a forward basis. GE is up 13% for the year, slightly outperforming the S&P 500.
Oracle Corporation (ORCL) is also trading at fairly low levels for such a market leader and brand-name company - at about 15.5 times trailing earnings. Unlike GE, Oracle grew its earnings in its most recent quarter compared to the same period in 2011. Oracle, as is becoming common with many tech stocks, has more cash than debt on its balance sheet. Fisher's fund left its position in Oracle essentially unchanged at 20.4 million shares.
Fisher added slightly to his fund's position in Amazon.com (AMZN), moving it up from 2.5 million shares to 2.6 million. Combined with Amazon's 13% pop in Q2 against a slightly down S&P 500, Amazon has been moving aggressively into same-day retail delivery and into a broad menu of Kindle offerings as it attempts to generate enough growth to justify its trailing P/E of 283, forward P/E of 95, and five-year PEG ratio of 7.8. Amazon missed earnings in Q2 by a penny per share, after beating expectations for Q1 by 21 cents per share. Tiger Cub John Griffin's Blue Ridge Capital is another major holder of Amazon.
Anadarko Petroleum Corp. (APC) made our list of the ten most popular energy stocks among hedge funds based on Q1 data due to its strong position in oil and gas production in the U.S., where onshore development is booming in several geographies. Anadarko is unprofitable on a trailing basis, exposed to volatile oil and natural gas prices, and carries a beta of 2.1, but sell-side analysts believe its earnings will grow nicely (forward P/E of 16) and the stock has beaten expectations by at least 10% for three quarters in a row. Fisher's 13F reported owning 8.6 million shares, slightly up from 8.5 million at the end of the first quarter.
Fisher's fund didn't make too many big moves to bring stocks up to the top of its portfolio this quarter, unlike last quarter when two of the top five stock holdings, including Anadarko, were position increases of more than 75%. The fund appears to be satisfied with a diversified portfolio in its top five names: a healthcare stock, two technology stocks, an energy stock, and GE. Johnson & Johnson and GE pay good dividends; Oracle appears to be a solid value stock; Amazon and Anadarko harness two growth engines in the U.S. economy. The fund has all its bases covered and likely didn't see a need to make any big additions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.