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. You may know Fisher by his longtime column in Forbes magazine, where he's also No. 271 in the magazine's list of the 400 richest Americans, with a net worth of $1.8 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 $35.1 billion in value as of Dec. 31, 2012. It manages money for more than 100 large institutions, and its strategy involves macroeconomic research and fundamental analysis.
So what does Fisher's latest quarterly 13F filing tell us? Here are a few interesting details:
The biggest new holdings are Education Realty Trust and Mack-Cali Realty. Other new holdings of interest include Exelon (NYSE:EXC). Exelon is the nation's largest nuclear power company and is involved in other energy-generation businesses. It's trading near a 52-week low and its dividend yield is near 7%. The company has been whacked by the relatively high cost of nuclear energy in an environment of very low gas prices. The current situation won't last forever, though. Exelon carries a lighter debt load than many peers and is expanding into solar and wind power. In recent news, the company faces possible fines if it's found to have underreported costs to retire reactors, although it's disputing the allegations.
Among holdings in which Fisher increased its stake was Chinese search engine giant Baidu (NASDAQ:BIDU), which has been hurt in part by China's slowing growth rate. Baidu itself isn't growing too slowly, though, and much of China and Asia have yet to get online, representing further growth potential. But Baidu has serious competition. It also got whacked recently, after posting quarterly results that beat expectations and reducing near-term projections.
Fisher reduced its stake in lots of companies, including Spain's Banco Santander (NYSE:SAN) and Freeport-McMoRan Copper & Gold (NYSE:FCX). Banco Santander's earnings plummeted earlier this year, as it got rid of many bad loans, and in its year-end results it reassured some by maintaining its dividend, which recently yielded a hefty 8%. Some may worry about its location, in troubled Europe, but know that it generates much of its revenue in Latin America, where economies such as Brazil's are in better shape and growing faster than many in Europe.
Freeport has been hurt by low copper prices, higher costs of production, and global economic slowdowns. It's a low-cost producer of copper and molybdenum, positioned to benefit quickly from upturns in metals pricing. It's also diversifying away from copper a bit, moving into oil and gas exploration via a merger with its former relation, Plains Exploration and Production. Freeport has a balance sheet that's unusually strong, it offers a 3.5% dividend yield, and its fourth-quarter earnings report was stronger than expected.
Finally, Fisher's biggest closed positions included PSS World Medical and Warnaco Group. Other closed positions of interest include Diamond Foods (UNKNOWN:DMND.DL), which had a tough 2012, losing out on a bid for Pringles and having to restate financial results, among other challenges. With negative free cash flow and negative net income, along with meager cash and rising debt, delve deeply into Diamond before investing in it. It may turn itself around, but it seems to have some work to do.
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. 13-F forms can be great places to find intriguing candidates for our portfolios.