For the past two decades, investment pro Ken Fisher's stock picks have beaten the pants off the market. So when money gurus like Fisher make big moves, investors large and small pay attention. Luckily for us, money managers must reveal their stock maneuvers every quarter in their SEC 13F filings. Here are a few of Fisher's newest picks.
Fisher's fund initiated a $113 million position in Kate Spade & Company (NYSE:KATE), a $4.2 billion company engaged in the design and marketing of premium apparel and accessories. Formerly known as Fifth & Pacific and Liz Claiborne, Kate Spade recently shed its Juicy Couture and Lucky brands to align the company's name with its remaining, namesake brand. Compared to its luxury fashion competitors, the company is a young concept, with roughly 200 stores (most of which opened in 2012). Kate Spade boasts long-term potential for margin expansion and opportunities to clutch global and U.S. market share on an aggressive rollout strategy under a new management team . Kate Spade stands to gain from its ahead-of-the-curve digital positioning, the potential for licensing, and a new pricing strategy that includes apparel at more affordable opening price points, as well as more expensive price tags on its higher-end goods. Its stock has gained 5% year to date and returned 155% to shareholders last year. Its P/E of 57 hovers significantly above the industry average of 28.
Fisher also added Heartland Payment Systems (UNKNOWN:HPY.DL), which is the sixth-largest payment-processor in the U.S. Its other merchant services include the sale and rental of terminal equipment and the sale of terminal supplies. Heartland Payment Systems recently launched its OneCard Mobile app, which enables college students with a secure payment system for all campus services and activities, a virtual ID card, and permission-based access to buildings, events, and information. The $1.4 billion company also recently bought MCS Software, a provider of school food-service point-of-sale (POS) and online-payment solutions with a client base of over 4,000 K-12 schools in the U.S. The acquisition gives Heartland, which now serves 35% of the public schools in the U.S., a hardier position in the K-12 school nutrition and POS technology industry. Is Heartland Payment Systems playing the right part in the new technology revolution? Fisher certainly thinks so. His fund bought a $72.5 million stake in the company last quarter. Heartland Payment Systems' P/E of 19 trades below the industry average 29.
Atlas Air Worldwide Holdings (NASDAQ:AAWW) sparked Fisher's interest again this quarter, boosting his stake by 285%. The New York-based company provides a range of outsourced aircraft operations and related services. Atlas Air operates aircraft on behalf of international airlines, freight forwarders, and the U.S. military. Part of Atlas Air's troubles come from British Airways returning three aircraft and terminating a long-standing contract. An expedited drawdown of troops in Afghanistan is also impacting the company. Atlas expects earnings to suffer as a result of bringing home fewer troops this year. A silver lining for Atlas Air, the company bought back nearly 7% of outstanding shares in 2013, while shares traded less than tangible book value. Further stock buybacks are authorized. This beaten-down stock currently trades near the low end of its 52-week price range, and its P/E of 10 trades well below the industry average 34.
Kate Spade, Heartland Payment Systems, and Atlas Air Worldwide Holdings possess forward price-to-earnings ratios of 52, 14, and 10, respectively. By comparison, the P/E ratio of the S&P 500 is currently 18, signaling Heartland Payment Systems and Atlas Air Worldwide Holdings may be undervalued. The Motley Fool CAPS community rates Heartland Payment Systems and Atlas Air Worldwide Holdings 5-star (out of 5) and 4-star stocks, respectively. Meanwhile, our CAPS community has a less favorable outlook for Kate Spade, which is a 2-star stock.
Fisher is certainly feeling bullish on these three stocks right now. But don't take his opinion as the last word. Carry out your own research and formulate your thesis. You'll be a better investor for it.
Nicole Seghetti has no position in any stocks mentioned. Follow her on Twitter @NicoleSeghetti. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.