By Aubrey Tabuga
Fisher Asset Management is an independent money management firm. It administers billions of dollars of high-net-worth individuals, foundations, and many others. Based on October 23, 2012 Whalewisdom.com data, the fund management has a current portfolio value of $35 billion. It is managed by Ken Fisher, a multi-billion investor, who is a Forbes' Portfolio Strategy writer for nearly three decades now. Considered as one of the industry's most influential people, Ken Fisher is a best-selling author in investing topics.
I looked into Fisher's largest stocks that has the highest yields and have been good dividend payers. These are Pfizer (PFE), Johnson & Johnson (JNJ), Cisco (CSCO), General Electric (GE), and Wells Fargo & Company (WFC). I will provide a brief view of the fund's historical positions in these stocks.
% of Portfolio
Change in Shares
EPS next year
Johnson & Johnson
Wells Fargo & Company
Sources: Whalewisdom.com and Finviz.com; as of Oct. 23, 2012
Annualized Dividend Payments
Source: Nasdaq.com as of Oct. 19, 2012
Pfizer Inc. is a worldwide leader in producing and marketing biopharmaceutical products. It is known for the brands like Lipitor, Celebrex, Norvasc, and Viagra. Pfizer products range from pharmaceuticals to livestock and companion animals' drugs. The New-York based company likewise manufactures nonprescription products and Nutritionals. Pfizer recently reported that it will acquire NextWave Pharmaceuticals Inc., a maker of ADHD drug, which is FDA-approved. The drug is expected to be in pharmacies by the start of next year. The deal is said to be worth about $700 million.
Fisher Asset Management increased its position in the drugs company by 44% in the third quarter. The company now comprises 2.20% of the fund's total holdings. This has been the largest position of Fisher in Pfizer within the last 6 quarters.
The company's dividend yield is high at 3.44%. PFE is a good dividend payer. The payment has been increasing consistently since the second quarter of 2009. In August, it paid an amount that is 10% higher than that for the same period last year. Earnings are expected to get rosier with an estimated EPS of 2.33 next year, which is two-folds that of the current EPS of 1.15. PFE's profit margin is 15.7%. The stock also rose by nearly 10.5% within the quarter.
Johnson & Johnson
Johnson & Johnson, the name behind prescription drugs Edurant, Xarelto, and Zytiga, is a leading healthcare products company. Its business ranges from baby care to oral care, wound care, and women's health products. Its 117,900-strong workforce also produces Nutritionals and medical devices. The company recently declared promising results in its tests on Canagliflozin, a candidate treatment for type II diabetes. If successful, development of the drug will have a significant commercial impact on the company.
Although Fisher has slightly reduced its shares in JNJ, the company still comprises a high share of 2.03% of the fund manager. One of the latest sizeable purchases of JNJ's holdings by the asset manager was in the Q2 last year, where it increased its holdings by 71%. Fisher favors this company by making only small changes in its position. In fact, JNJ has remained on the top 3 stocks among Fisher's holdings in many quarters.
JNJ has a good track record in giving out stable dividends. The stock has a dividend yield of 3.4%. The amount of payment has been rising consistently since 2000. The growth prospect for JNJ is likewise good as shown by a higher EPS estimates for next year of 5.48, higher than the current one. The stock price has been performing well within the quarter at 7.55%.
Cisco Systems, Inc.
Cisco Systems, Inc. is a world leader in manufacturing and marketing networking equipment. The Cisco products and services are devoted to Next-Generation Network (NGN) Routing, Switching, Collaboration, Wireless, Data Center, and other products. The technology company has a market capitalization of $99.18 billion. Founded in California in 1984, its reach is truly global. Cisco has acquired NDS Group Limited (NDS) in the middle of this year. The company recently ended a partnership with ZTE due to concerns over the sale of Chinese-made equipment to an Iranian company.
Fisher has considerably increased its holdings in the networking equipment by 77% this third quarter. It now owns approximately 37.8 million shares, which is equivalent to 1.99% of its total portfolio. It is noted that the fund manager has drastically augmented its position in CSCO in the second quarter. Prior to that, Fisher has been continuously selling off its shares in the company.
Cisco's dividend yield is 2.08%. It has been a good dividend payer. The dividends grew by around 85% in October from that of the same period last year. In the quarter, the stock's performance went up by an impressive 21.19%. Analysts point out that Cisco's current desirability as an investment lies on its earnings per share growth, growth in net income, revenue growth, remarkable return on equity and good valuation levels.
General Electric is the technological innovator that has brought us many products that have advanced the way of life. Founded in 1892, GE has a current market capitalization of $221 billion. GE's business is segmented into the following: home and business solutions, energy infrastructure, aviation, healthcare, transportation, and capital. Recently, GE was reiterated as a buy with a B ratings score by TheStreet Ratings. Its strength reportedly lies on its revenue growth, EPS growth, sound performance of stock price, good cash flow from operations, and increasing profit margins.
In the third quarter, Fisher maintains its holdings in GE at over 31 million shares although it sold off a negligible amount. The fund manager has been increasing its position in the first half of this year. The current company's share on its portfolio is still high at 1.96%.
The annual dividend yield is 3.22%. The company's dividends payment has been consistently increasing since the 2nd quarter of 2009. It is noted that GE's annual dividend payment went on a slump from 2008 ($1.24) to 2010 ($0.42). Nevertheless, it has shown progress since then. In terms of earnings, GE's EPS is at 1.24 but is expected to rise to 1.74 next year. The stock's performance in the quarter is at an encouraging 9.49%.
Wells Fargo & Company
Wells Fargo & Company is one of the largest bank holding companies in the US in terms of assets. It operates in three lines - community banking; wholesale banking; and wealth, brokerage, and retirement. As of end of 2011, the San Francisco-based company had an asset of $1.3 trillion and stockholders' equity of $140 billion. WFC was founded in 1929 and now has 267,000 employees. WFC's approval of small business loans worth $1.24 billion under the SBA makes it the largest volume SBA lender in the United States, for the 4th consecutive year.
The fund manager increased its position in the company in the third quarter by a notable 69%. Whalewisdom.com data shows Fisher now owns over 18 million shares of WFC, the largest amount within the last 6 quarters. WFC now forms 1.77% of Fisher's total portfolio.
The company offers a 2.59% dividend. Annual dividends payment has been stably rising since 2010. Its earnings are poised to increase as shown by a higher estimated EPS of 3.63, as compared to the current one at 3.19. The stock is performing positively in the quarter at 4.51%. The profit margin is 19.4%, higher than the industry average of 15.4%. Its payout ratio has declined from a historical rate of 57.64% to 24.21%.