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, who's on Forbes magazine's list of the 400 richest Americans. The company manages money for more than 100 large institutions, and its strategy involves macroeconomic research and fundamental analysis. You may know Fisher's father, Phil Fisher, as he wrote the seminal investing text, Common Stocks, Uncommon Profits. The company's reportable stock portfolio totaled $48.4 billion in value as of the end of 2014.
So what does Fisher Asset Management's latest quarterly 13F filing tell us? Well, it's been significantly increasing its stake in a bunch of companies. Following are three interesting examples.
Nissan Motor Co. Ltd. (OTC:NSANY)
Fisher upped its stake in Nissan by 623%. The Japanese carmaker recently had a 8.4% market share in the U.S. and is aiming to boost that to 10% in coming years. Part of its plan is gaining ground in the full-size truck segment, via its redesigned Titan. My colleague Daniel Miller has pointed out that that's a tall order, since the company sold 12,527 trucks in 2014 -- while Ford sold that many of its F-series vehicles in just five days. All big trucks may enjoy a boost in sales because of the currently low price of gas, though that can change in short order.
At the recent North American International Auto Show in Detroit, Nissan CEO Carlos Ghosn waxed bullish about Nissan's prospects, pointing to the Titan as well as global expansion of its Infiniti line. Meanwhile, with the Russian ruble in trouble, Nissan is looking for market-share gains for Lada vehicles that are made locally by Nissan partner Renault, and thus less affected by currency issues. He projected modest sales gains in the U.S. in 2015, but 6% to 7% growth in China.
Another catalyst for Nissan is its Leaf electric car, which saw sales jump 34% in 2014. It does face competition, such as from Tesla Motors, but the Leaf is more affordable, at least for now. (A mass-market Model 3 Tesla electric car is expected in a few years.) In Nissan's third quarter, revenue surged 17% year over year, while earnings popped by 21%.
Ctrip.com International, Ltd. (NASDAQ:CTRP)
Launched in 1999, Ctrip.com is China's largest online hotel and travel consolidator (as measured by transaction volume), handling reservations, ticketing, tour packages, corporate travel, and more, through its websites, mobile apps, and phone center. (There have been more than 350 million downloads of its apps.)
Ctrip.com shares have averaged annual gains of about 25% over the past five years but are down over the most recent year. Its fan club has shrunk a bit, too, with Oppenheimer downgrading it from "Outperform" to "Perform" in mid-February. The company's revenue and net income have actually been growing rapidly, by an annual average of more than 40% and more than 30%, respectively, over the past 10 years, but profit margins have taken a hit as the company has invested heavily in growth, increasing its spending on technology and additional employees, among other things. Net margins, for example, have sunk from a high above 40% in 2005 to roughly 10% today. (Still, 10% is far from unprofitable.)
Management has warned that it may soon be posting results in the red as it spends to battle rivals and grab market share. That has some worried, but others note that many successful companies run at a loss for a while intentionally as they build their business. Ctrip.com's latest results are expected in early March -- keep an eye out for them if you're interested.
Petroleo Brasileiro Petrobras SA (NYSE:PBR)
Petroleo Brasileiro is an oil giant majority-owned by the Brazilian government. Although its recent P/E ratio near 6 and its forward P/E ratio near 4 make it seem tantalizing, those numbers are low because its stock price has dropped -- by more than 40% over the past year. What's going on? Well, there have been charges of mismanagement and bribery, as well as concerns over production delays and the company's steep debt load.
It gets worse, because the company is vulnerable to governmental meddling in its business, such as when gas prices were kept below its costs. The current low price of oil isn't helping, either. More recently, Petrobras has made a huge offshore oil discovery, but the government is collecting billions from the company in exchange for drilling rights.
It's not all bad, as revenue has been rising in recent years. But profit margins have been falling and free cash flow is negative -- and despite the fact that its top management has all recently resigned, its corruption scandal is not yet completely behind it. It may do well in the long run, and this might be a great entry price, but it's also very, very risky.