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Every quarter, many money managers have to disclose what they've bought and sold, via "13F" filings. Their latest moves can shine a bright light on smart stock picks.
Today let's look at Fisher Asset Management, founded in 1979 by Ken Fisher. It manages money for more than 100 large institutions, and its strategy involves macroeconomic research and fundamental analysis. You may know Fisher by his longtime column in Forbes magazine, where he's also No. 243 in the magazine's list of the 400 richest Americans, with a net worth of $2.3 billion. You may know his father, as well: Phil Fisher wrote the seminal investing text, Common Stocks, Uncommon Profits.
The company's reportable stock portfolio totaled $39.9 billion in value as of September 30, 2013.
So what does Fisher Asset Management's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are UBS and Daimler AG. Other new holdings of interest include Rite Aid (NYSE: RAD ) , once beleaguered but now posting profits and giving shareholders a wild ride. Its top line isn't growing briskly, though, and its rivals sport stronger numbers – and dividends, too. Bulls believe that if Rite Aid can improve its performance, such as profit margins, its future can be rosy. Some think Rite Aid might end up acquired, but others think that's far from necessary.
Among holdings in which Fisher Asset Management increased its stake was Brazil-based Vale (NYSE: VALE ) , the world's largest iron-ore concern (though Rio Tinto is about to take that title away). Vale has been cutting costs aggressively and selling assets while focusing on its most promising opportunities, such as iron. Demand from China seems to be growing, which bodes well for Vale.
Fisher Asset Management reduced its stake in lots of companies, including Philip Morris International (NYSE: PM ) and Freeport McMoRan Copper & Gold (NYSE: FCX ) . Philip Morris International focuses on tobacco sales outside the U.S., where regulations and restrictions are often lower, and sports seven of the top 15 cigarette brands in the world, including Marlboro. The company just reported its third-quarter results, with some not-great news, such as cigarette shipping volume dropping 5.7%, net revenue rising only 0.1%, and management lowering projections. Diluted earnings per share did pop by 9%, though, partly because of price increases. Philip Morris stock yields 4.3%, which reflects a recent 11% dividend hike. Emerging and developing markets represent significant growth potential for Philip Morris.
Freeport McMoRan Copper & Gold, the world's second-largest copper producer, has been battling falling copper and gold prices. Bulls see copper rebounding, though, and analysts at Goldman Sachs have named it as a top pick in its industry, while those at RBC Capital expect estimate-topping earnings because of rising prices and higher volume. Bears, though, worry about copper's supply surpassing demand, which will keep prices low. Freeport's second quarter was encouraging, featuring estimate-topping earnings (and revenue a bit below expectations), along with effective cost cutting. Its recent purchases of oil and gas exploration and drilling companies has diversified its operations. Its stock yields 3.7%.
Finally, Fisher Asset Management's biggest closed positions included Saks and Stillwater Mining. Other closed positions of interest include power management company Eaton (NYSE: ETN ) , which has been trading near a 52-week high. It posted revenue up 38% in its last quarter, and net income up 30%, but earnings per share dropped because of dilution caused by the company issuing more shares. Its $12 billion acquisition of Cooper Industries has been boosting its competitive position, giving it some tax advantages. Eaton upped its dividend by 11% earlier this year; it yields 2.4% now. Some worry about competition and innovation hurting Eaton, but others are bullish about its growth prospects once global economies heat up more.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing, and 13-F forms can be great places to find intriguing candidates for our portfolios.
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