Money managers must disclose their stock holdings every quarter, giving investors like you and me a peek into their portfolios. Based on his firm's first-quarter 13F SEC filing, here are multibillion-dollar fund manager Ken Fisher's top three stock holdings.
The largest single stock holding in Fisher's fund is American Express (NYSE: AXP ) . Unlike its credit card-issuing peers, which generate the majority of their revenue by charging interest on loan balances that customers carry, American Express relies heavily on merchant fees and the annual fees it charges its cardholders. American Express can charge higher fees to merchants than competitors for two key reasons. First, American Express cardholders spend more on average than holders of other cards. Second, American Express offers merchants valuable marketing data on the spending behaviors of affluent consumers. American Express' global potential provides a compelling opportunity for growth. The company has successfully shifted its domestic focus to charge cards and co-branded cards, which attract customers who prefer to pay with plastic but don't want to accumulate debt. The company's revenue generation outside the U.S. will likely accelerate as its cards are accepted at more locations and spending growth in emerging countries outpaces U.S. spending growth.
Health care conglomerate Johnson & Johnson (NYSE: JNJ ) is Fisher's second-largest stock holding, making up 2.2% of his fund's portfolio. Mitigating the risk of possible decline in any single business segment, the maker of Tylenol, Band-Aids, and Neutrogena boasts leading positions in pharmaceuticals, medical devices and diagnostics, and consumer health. No more than 14% of revenue is derived from any single company division. J&J boasts an opportunity for growth from its extensive late-stage biopharmaceutical pipeline, which has led to many recent new drug launches. New products are in attractive therapeutic areas such as prostate cancer, hepatitis C, and diabetes. With major patent expirations largely behind J&J, the new specialty-focused products should help to accelerate growth and drive earnings even higher in future years. The drugmaker's pharmaceutical segment enjoyed 10.9% sales growth in 2013.
Drugmaker Pfizer (NYSE: PFE ) is his fund's third-largest single stock holding. The pharmaceutical giant acquired many companies during the past few years. But recently, Pfizer has been divesting its noncore businesses. As Pfizer becomes a smaller company by unloading its nonpharmaceutical businesses, successful pipeline products should have a bigger impact on the company's growth and profitability. Like J&J, Pfizer boasts an opportunity for growth from its extensive late-stage biopharmaceutical pipeline. Pfizer currently has about 80 drugs in various stages of clinical development, with roughly one-third in late-stage development. Additionally, products for stroke prevention and rheumatoid arthritis have been approved in recent years. And promising drugs in development treatments for various forms of cancer. The maker of Viagra and Lipitor makes up more than 2% of Fisher's portfolio.
Fisher's confidence in these three stocks -- or the financial-services and health-care sectors in general -- may be your cue to consider similar positions in your own portfolio.
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