Kenneth Fisher's Top 9 Holdings

by: Efsinvestment

Kenneth L. Fisher, the fourth-longest-running columnist in the history of Forbes, is a businessman and the founder, chairman, and CEO of Fisher Investment, a money management firm. He has written seven books, including The Only Three Questions That Count, How to Smell a Rat, Super Stocks, The Ten Roads To Riches, and Debunkery. Fisher’s portfolio outstripped the S&P 500 by 5.2% on an annual basis in the last 10 years. His company focuses mainly on the energy industry. However, industrial machinery and technology companies also interest Fisher Investment. Here is a brief analysis Fisher’s top nine holdings.

iShares MSCI Emerging Markets Index (EEM) is a company that operates the exchange-traded fund, whose market cap is $40.3 billion. The fund mostly invests in large-cap Russian, Brazillian, Chinese and Indian (BRIC) stocks. There are also companies from Argentina, Turkey, Poland, South Africa and other fast-growth countries. Emerging markets are expected to take over the advantage of developed countries in the near-future. While EEM is subject to extreme volatility, the power of mean reversion will be well-rewarding in the long-term.

Occidental Petroleum Corporation (OXY): The California-based Occidental has an $86.51 billion market cap. Its P/E ratio is 17.68, and forward P/E ratio is 11.23. OXY had a 45% EPS growth this year, and earnings increased by 28.09% this quarter. OXY has good operating and profit margin ratios, 40.11% and 23.59%, respectively. Oppenheimer, Barclays Capital and RBC Capital suggested an outperform rating for OXY, while Deutsche Bank, Argus and UBS recommend buying. SMA50 and SMA200 ratios are 4.57% and 18.33%, respectively. OXY has been increasing its yields sharply. It is a high-growth company in a volatile sector.

Siemens AG (SI) engages in electronics and electric engineering, having the biggest market cap ($125.17 billion) in the industry. Siemens has a P/E ratio of 19.23, and a forward P/E ratio of 13.49. SI had a 73.94% EPS growth this year, while analysts estimate a 19.25% EPS growth for the next five years. The company paid a 2.69% dividend, while the profit margin was 5.60% in 2010. Its PEG value is 1.00, while P/FCF is 11.66. SMA50 and SMA200 ratios are 1.67% and 18.02%, respectively. Bernstein and Credit Suisse suggested an outperform rating for Siemens, while Sterne Agee, Deutsche Securities and Argus recommend buying. Although Siemens’ debt-to-asset ratio is a bit high, given the exposure to emerging markets, Siemens shares can be a profitable long-term investment.

Freeport-McMoRan Copper & Gold Inc. (FCX): The Arizona-based FCX explores, produces and mines mineral resources. It is one of the biggest companies in the industry with a $47.49 billion market capital. The company has a good trailing ratio of 9.78, and a forward P/E ratio of 7.99. The company had a 14.35% EPS growth during the last five years, while earnings increased by 55.90% this year. ROA is 21.25%, while ROE is 46.51%. Paying a 1.99% yield, FCX had a 30.38% profit margin last year. RBC Capital suggested an outperform rating for FCX, while UBS, Dahlman Rose, Stifel Nicolaus, Canaccord Genuity, Argus, and Canaccord Adams recommend buying. Its debt-to-asset ratio has been decreasing sharply for the last five quarters. P/FCF ratio is 11.8, while ROI is 27.49%. FCX is one of the safest companies in the mining business.

Anadarko Petroleum Corporation (APC): Similar to OXY, Anadarko is a petroleum company exploring and producing oil and gas. With a market capital of $37.81 billion, Texas-based Anadarko has a 48.79 P/E ratio, and a 18.51 forward P/E ratio. Although the company had a negative EPS growth over the last five years, earnings increased by 640.85% this year, while analysts expect a 38.57% EPS growth in the next year. Prices have been increasing since September. With a 0.48% dividend yield, Anadarko had a 7.47% profit margin last year. RBC Capital suggested outperform for APC, while UBS and Jefferies & Co. recommend buying. On the other hand, PEG value is 3.07, and P/FCF ratio is 640.79. SMA20 and SMA50 ratios are -5.09% and -5.83%, respectively. Its debt-to equity ratio is 0.63, while long-term debt-to-equity is 0.62. Moreover, insider transaction has decreased by 28.44% during the last six months. Anadarko is a little pricey at the current level.

Schlumberger Limited (SLB), founded in 1927, provides oil and gas equipment and services. SLB has a $122.16 billion market cap. SLB shares rose from $55 to $95 per share between September and March. It has a P/E ratio of 21.75, and its forward P/E ratio is 16.21. Its earnings increased by 29.72% this year, while analysts expect a 36.36% EPS growth next year. With a 1.21% yield, net profit margin of the company is 14.16%. Its debts nearly doubled for the last four quarters. On the other hand, SLB shares double-topped recently. Morgan Keegan, FBR Capital, RBC Capital, and Credit Suisse suggested outperform for the company, while Dahlman Rose, Deutsche Bank, and Jefferies& Co recommend buying. Analysts give a 1.80 recommendation for the company (1=Buy, 5=Sell).

Caterpillar Inc. (CAT): Formerly known as Caterpillar Tractor Co., Caterpillar Inc. engages in manufacturing and sale of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electic locomotives over the world. Its market cap is $71.14 billion, the biggest company in its industry in terms of market capital. RBC Capital, Credit Suisse, and Robert W. Baird suggested an outperform rating for the Illionis-based company, while Jefferies recommend buying. With a trailing ratio of 26.65, CAT has a 13.23 forward P/E ratio. The company had a gigantic EPS growth of 190.36% this year, and 305.92% this quarter. SMA50 and SMA200 ratios are 3.30% and 24.76%, respectively. Paying a dividend yield of 1.6%, Caterpillar had a profit margin of 6.53% last year. CAT is rising steadily since Sep, 2010. Caterpillar is a truly global business, and the company will greatly benefit from the rise of emerging countries.

Oracle Corp. (ORCL) is an enterprise software company, founded in 1977, and based in Redwood City, California. Owning a market capital of $176.46 billion, ORCL has a P/E ratio of 23.09, and a forward P/E ratio of 14.59. ORCL had a 17% EPS growth during the last five years, while earnings increased by 75.44% this quarter. Net profit margin in 2010 was 22.42%, while the company offered a 0.69% dividend. It has an impressive gross margin of 75.34%, while operating margin is 31.94%. BMC, FBR, Oppenheimer, and Macquarie suggested outperform for Oracle, while Stifel Nicolaus, UBS, ISI Group, and Caris & Co. recommend buying. SMA50 and SMA200 ratios are 5.09% and 18.53%, respectively. Oracle has been paying dividends since April 2009, while the company has been experiencing sharp ups and downs in its debt-to assets ratio. Cary-based S.A.S Institute (private) is increasingly becoming a serious competitor to Oracle’s business.

BHP Billiton Ltd. (BHP) works on industrial metals and minerals. Its market cap is $265.7 billion, and its price has increased from $65 to $95.50 per share since September. With a P/E ratio of 15.58, and a forward P/E ratio of 12.34, BHP increased its earnings by 116.14% this year, and 71.71% this quarter. U.K. & Australian BHP had a 28.03% profit margin last year, while it paid a 1.91% dividend. ROA and ROE ratios are 19.45% and 34.21%, respectively. Credit Suisse suggested outperform for BHP, while Dahlman Rose, Canaccord Adams, UBS, and Citigroup recommend buying. In case of a correction, BHP can enter a safe dividend & growth portfolio.

Disclosure: I am long EEM.