Analyzing Billionaire Ken Fisher's Top Sells

Includes: AMAT, GE, PNC, SNY, XOM
by: Rash Menaria

Fisher Investments is a Woodside, California-based investment advisory firm founded by billionaire Kenneth Fisher. Fisher Investments manages $33 billion worth of equity assets, primarily adhering to a value-oriented approach, managing U.S., international and global portfolios.

I discussed Fisher Investment's Top Buys in a previous article. In addition to buys, it is also interesting to have a look at the top stocks where Fisher Investment is booking profit and selling its holdings. The following is a list some of Fisher Investments' top sells from the December quarter, as released in its most recent 13F filing with SEC.



Shares Held as on 09/30/2011

Shares Held as on 12/31/2011

Change in shares

PNC Financial Services Group Inc.










Exxon Mobil Corp.





General Electric Co.





Applied Materials Inc.





I believe Exxon (XOM) and General Electric (GE) are likely to underperform the broader markets going forward. However, I would actually recommend going long on Sanofi-Aventis (SNY) and Applied Materials (AMAT).

Exxon Mobil Corporation is an American multinational oil and gas company. It is the world's largest publicly traded oil company. It engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas and petroleum products.

Exxon reported disappointing Q4 results, with an EPS well below the consensus estimates, after accounting for the one time asset sale gain. Production fell by 9% y-y, and upstream revenues missed the market expectations due to disappointing volumes. Even downstream and chemicals businesses reported earnings below expectations.

Exxon is the world's largest gas producer. Despite a bleak natural gas outlook in the U.S, XOM continues to be bullish on natural gas demand, as is evident from its production increase in Q4 2011 and also by its most recent acquisition of XTO Energy, a natural gas company. At a time when its competitors Chesapeake and Conoco-Phillips have announced natural gas drilling cuts, XOM has continued to look for growth in natural gas production. While this move clearly points to their approach towards developing a long term resource, it is expected to affect the near term earnings potential. Given the fact that XOM trades at a premium to its peers and its near term headwinds, I expect its stock to see a correction in the near term. I have recently written a fairly detailed article on Why You Should Avoid Exxon Despite of Surging Oil Prices. Please refer it for more details on my short thesis.

I also don't like General Electric. GE is likely to see headwinds from weak pricing, a difficult European environment and decelerating growth in emerging markets. Hence I recommend a sell on the stock.

Sanofi and Applied Materials are two stocks which I would recommend going long on.

Sanofi is a global pharmaceutical company with its headquarters in Paris, France. It has five divisions: Pharmaceuticals, Vaccines, Generics, Animal Health and Consumer Health. Sanofi is trading at a discount to its peers, at a forward P/E of 9x, and has a dividend yield of ~3.8%. I believe the company is undervalued, and the market is not pricing its 2013 onward growth outlook driven by new businesses: vaccines, emerging markets, consumer health, animal health, generics.

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic and related industries worldwide. It operates four business segments; Silicon Systems Group, Applied Global Services segment, Display segment and Energy and Environmental Solutions segment.

2011 was a difficult year for semiconductor stocks in general, and AMAT in particular. AMAT's SSG revenues declined and it faced market share losses. However, I believe its Display and EES segments demand has hit bottom now and is unlikely to deteriorate any further. Higher capex guidance by semiconductor largecaps indicate a likely recovery in the semiconductor industry in 2012, and AMAT is well-positioned to capitalize on this situation, driven by a beneficial mix shift in Wafer Fabrication Equipment (PVD, CVD, etch and CMP) and growth potential in solar and flat panel displays. Further, increased innovation in transistor fabrication is expected to benefit AMAT, because of its significant market share in front end fabrication equipment.

After several quarters of resource diversion and share loss in its WFE, I believe AMAT's share price has bottomed out. AMAT is refocusing on the semiconductor business, with a better WFE mix and improved cost structures across all its businesses. As the semiconductor industry recovers, AMAT is well-positioned to outperform its peers.

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