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“That Which Drops the Most, Bounces the Most”: Ken Fisher’s Top 10 Growth Stock Picks

·12 min read

In this article, we will look at billionaire Ken Fisher's top 10 growth stock picks. If you want to explore similar stocks, you can also take a look at Ken Fisher's Top 5 Growth Stock Picks.

Ken Fisher is an American billionaire investor and financial analyst. Mr. Fisher is the hedge fund manager of Fisher Asset Management, a Washington-based hedge fund with over $197 billion in assets under management.

"That Which Drops the Most, Bounces the Most"

Ken Fisher is among the few veteran investors who leverage social media to impart their wisdom. Mr. Fisher has his own YouTube channel where the billionaire regularly uploads videos related to capital markets and finance. Mr. Fisher is a known contrarian. Unlike many investors in 2022, Ken Fisher has remained bullish on growth stocks as he sees them outperforming when the market rebounds. On August 27, Ken Fisher explained in a video how market movements are related to growth stocks, particularly tech stocks. According to the billionaire, the performance of growth stocks is proportional to the direction of markets. Ken Fisher thinks the best way for investors to position their portfolio for a rebound is to invest in growth stocks because "that which drops the most" in a bear market, "bounces the most" in the following bull market. Here are some comments from the investing legend:

"I think the big unseen truth of 2022 is that markets have had one powerful feature. The movement of tech, and in fact growth stocks overall, has correlated overwhelmingly with direction of market. On days when the market's down, tech goes down more. On days when the market's up, tech goes up more...

In history, when we've had bear markets, there is another overwhelming tendency that, that which drops the most, bounces the most in the early phases of the subsequent bull market...

Once you get down this far into a bear market, it is not terribly long in time until you normally get to a bottom...

Once you get to that bottom you should expect to see tech leading for about the next year, and maybe longer, but for about the next year,  and therefore we should be seeing most of the next year led by tech going up...

Categories that fall the most in bear markets bounce the most for a good long time coming off the bottom, and you should expect that with tech as we hit a bottom, when we hit a bottom..."

As of September 21, the tech-heavy Nasdaq Composite index has lost more than 27% year-to-date. Growth stocks are taking a beating in 2022, however, now may be the time to buy some of them at a discount and position your portfolio for a rebound. Some of Ken Fisher's top growth stock picks include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).

"That Which Drops the Most, Bounces the Most": Ken Fisher's Top 10 Growth Stock Picks
"That Which Drops the Most, Bounces the Most": Ken Fisher's Top 10 Growth Stock Picks

Our Methodology

To determine the top 10 growth stock picks of billionaire Ken Fisher, we reviewed Fisher Asset Management's second-quarter 2022 13F filings. We searched for tech companies among the fund's top ten holdings and listed them in increasing order of Fisher Asset Management's stake in them. We have also mentioned the hedge fund sentiment and analyst ratings along with each stock.

Ken Fisher's Top 10 Growth Stock Picks

10. Meta Platforms, Inc. (NASDAQ:FB)

Fisher Asset Management's Stake Value: $1,867,556,000 

Percentage of Fisher Asset Management's 13F Portfolio: 1.32%

Number of Hedge Fund Holders: 184

Meta Platforms, Inc. (NASDAQ:FB) is trading at cheap levels relative to earnings right now. As of September 21, the stock has a trailing twelve-month PE multiple of 12x and has free cash flows of $35.8 billion. Moreover, the company appears to be sustaining its profitability, as it has a trailing twelve-month operating margin of 33.40. Meta Platforms, Inc. (NASDAQ:FB) is an undervalued growth stock to buy according to billionaire Ken Fisher.

On September 12, Piper Sandler analyst Thomas Champion revised his price target on Meta Platforms, Inc. (NASDAQ:FB) to $175 from $190 and maintained a Neutral rating on the shares. On September 13, Morgan Stanley analyst Brian Nowak maintained his $225 price target and buy-side Overweight rating on Meta Platforms, Inc. (NASDAQ:FB).

As of June 30, Fisher Asset Management's stake in Meta Platforms, Inc. (NASDAQ:FB) is valued at $1.86 billion. The investment covers 1.32% of Ken Fisher's 13F portfolio.

Insider Monkey spotted 184 hedge funds having stakes in Meta Platforms, Inc. (NASDAQ:FB) at the end of Q2 2022. The total value of these stakes amounted to $18.19 billion.

Here is what Saga Partners has to say about Meta Platforms, Inc. (NASDAQ:META) in its second-quarter 2022 investor letter:

Meta (formerly known as Facebook, when I discuss the social media apps specifically, I’ll still refer to Facebook). The Portfolio first bought Meta in Q4’18. It was a controversial investment then and has continued to be to this day. The core mission of the company has been to make the world more open and connected. To do that, it needs to connect everyone in the world, which it largely has done with its nearly 3 billion monthly active users across its family of apps (Facebook, Instagram, and WhatsApp). That type of scale is hard to grasp and is getting pretty close to essentially every smartphone user outside of China and Russia.

From an investing perspective, there are questions surrounding Apple’s iOS App Tracking Transparency (ATT) changes that limit sharing user data across apps, investments in virtual reality (VR) and augmented reality (AR) i.e. the metaverse, and competitive threats surrounding the rise of TikTok. It seems like only yesterday (or last year) that one of the major risks of Facebook was that the company was too powerful, had too much influence on public opinion, and faced antitrust and regulatory concerns…” (Click here to see the full text)

Other large-cap cash-rich tech stocks include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).

9. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Fisher Asset Management's Stake Value: $1,922,693,000

Percentage of Fisher Asset Management's 13F Portfolio: 1.36%

Number of Hedge Fund Holders: 87

On August 2, Advanced Micro Devices, Inc. (NASDAQ:AMD) announced strong earnings for the second quarter of fiscal 2022. The company reported earnings per share of $1.05 and beat EPS estimates by $0.01. The company's revenue for the quarter amounted to $6.55 billion, up 70% year over year, and ahead of Wall Street expectations by $20.78 million.

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a cash-rich, profitable, and low-risk growth stock to invest in right now. As of September 21, the stock has free cash flows of $3.3 billion, a trailing twelve-month operating margin of 16.8%, and a debt-to-equity ratio of 0.05.

On September 15, Mizuho analyst Vijay Rakesh revised his price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) to $125 from $140 and reiterated a Buy rating on the shares.

At the close of Q2 2022, 87 hedge funds were long Advanced Micro Devices, Inc. (NASDAQ:AMD) and held stakes worth $4.84 billion in the company. Of those, $1.92 billion were of Fisher Asset Management.

8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Fisher Asset Management's Stake Value: $2,151,918,000 

Percentage of Fisher Asset Management's 13F Portfolio: 1.52%

Number of Hedge Fund Holders: 72

On September 14, Apple Inc. (NASDAQ:AAPL) announced that it plans to use Taiwan Semiconductor Manufacturing Company Limited's (NYSE:TSM) latest N3E chipmaking technology to develop the A17 mobile processor which will be powering next-generation iPhones and MacBooks.

Shortly after the announcement, Daiwa analyst Rick Hsu raised his price target on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to NT$645 from NT$550 and upgraded the stock Buy from Outperform.

On July 14, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) announced market-beating earnings for the fiscal second quarter of 2022. The company reported sales of $17.8 billion, up 33.8% year over year, and beat revenue estimates by $327 million. The company reported earnings per share of $1.55 and beat EPS estimates by $0.05.

Insider Monkey spotted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) on 72 hedge fund portfolios at the close of Q2 2022. The total stakes of these hedge funds amounted to $9.22 billion. As of June 30, Fisher Asset Management's stake in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) sits at $2.15 billion.

Here is what Mawer Investment Management had to say about Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its second-quarter 2022 investor letter:

“More recently, as concerns about the economic outlook have grown, it is no longer just inflationary concerns and discount rate considerations that are impacting stock prices. Given an increasing probability of a recession, stock prices declined for holdings such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), a business where end market demand could wane in a recessionary environment, and Ashtead Group, an economically sensitive construction equipment rental company. In both of these cases the pullback is due less from recent results, and more from uncertainty in the economic outlook. More cyclical businesses such as those within metals and mining also experienced sharp declines over the second quarter. Our general underweight exposure to such materials businesses, which we believe are typically less competitively advantaged, had a positive impact on relative performance.”

7. ASML Holding N.V. (NASDAQ:ASML)

Fisher Asset Management's Stake Value: $2,187,022,000 

Percentage of Fisher Asset Management's 13F Portfolio: 1.54%

Number of Hedge Fund Holders: 47

On August 31, UBS analyst Francois-Xavier Bouvignies raised his price target on ASML Holding N.V. (NASDAQ:ASML) to EUR 665 from EUR 630 and upgraded the stock to Buy from Neutral. The analyst said that ASML Holding N.V. (NASDAQ:ASML) is one of the "most attractive names" in the present volatile market situation.

ASML Holding N.V. (NASDAQ:ASML) is a high-margin and cash-rich growth stock. As of September 21, the stock has a trailing twelve-month operating margin of 32.17% and has free cash flows of EUR 9.2 billion. The company is also a relatively less risky growth stock because of its low debt-to-equity ratio which, as of June 30, sits at 0.57.

According to Insider Monkey's database, 47 hedge funds were bullish on ASML Holding N.V. (NASDAQ:ASML) at the end of Q2 2022. The total stakes of these hedge funds amounted to $3.65 billion. Of those, $2.18 billion were of Fisher Asset Management. The investment covers 1.54% of Ken Fisher's 13F portfolio.

Here is what ClearBridge Investments had to say about ASML Holding N.V. (NASDAQ:ASML) in its first-quarter 2022 investor letter:

“During the quarter, we reduced our semiconductor exposure through the trim of ASML (NASDAQ:ASML) to manage concerns of a slowdown due to the risk of double ordering and potential softness in some consumer end markets. We increased our position in IT services with the purchase of Accenture as we remain optimistic about the long-term growth potential these companies provide, which is underpinned by the compressed digital transformation cycle, rising cloud adoption and growth in data-driven insights.

Despite the market volatility and hyper focus on rising rates, chief information officer surveys continue to forecast resilience in IT budgets this year. Growth in IT spending for 2022 is expected to remain above the 10-year pre-COVID-19 average, according to Morgan Stanley. We believe this is a result of the strong secular underpinnings brought on by digital transformation and businesses focusing on increasing efficiencies through technology.”

6. Adobe Inc. (NASDAQ:ADBE)

Fisher Asset Management's Stake Value: $2,263,713,000 

Percentage of Fisher Asset Management's 13F Portfolio: 1.6%

Number of Hedge Fund Holders: 92

Adobe Inc. (NASDAQ:ADBE) is a leading developer of computer software. On September 15, the company announced earnings for the third quarter of fiscal 2022. The company reported earnings per share of $3.40 and beat EPS estimates by $0.06. The company generated a revenue of $4.43 billion, up 12.6% year over year.

On September 15, Adobe Inc. (NASDAQ:ADBE) announced that it will be acquiring Figma Inc. for $20 billion. Figma Inc. operates a collaborative web application that allows UI developers to design application interfaces. The transaction is expected to close in 2023.

Shortly after the company reported earnings and announced its plans to acquire Figma Inc., Jefferies analyst Brent Thill reiterated his $475 price target and Buy rating on Adobe Inc. (NASDAQ:ADBE). Thill noted that the company's Figma deal is "pricey", however adding Figma's functionalities to the Adobe Creative Cloud would make the company's cloud offerings "even more compelling".

At the close of Q2 2022, 92 hedge funds were long Adobe Inc. (NASDAQ:ADBE) and held stakes worth $7.52 billion in the company. As of June 30, Fisher Asset Management's stake in Adobe Inc. (NASDAQ:ADBE) is valued at $2.26 billion.

Here is what Weitz Investment Management specifically said about Adobe Inc. (NASDAQ:ADBE) in its second-quarter 2022 letter.

“We added a new position in Adobe Inc. (NASDAQ:ADBE) as software stocks continued their fall from grace. Adobe is a leading provider of software in three large segments with nice tailwinds. Creative Cloud, a collection of Adobe’s software and applications, serves professionals, communicators, and consumers in the rapidly growing creator economy.

Document Cloud includes the ubiquitous PDF technology, Acrobat and Adobe Sign applications, and other tools to power digital documents. Experience Cloud is a customer experience platform that is a marketing tech leader alongside Salesforce.com (CRM).

Adobe is a “meat and potatoes” software investment with deeply entrenched competitive positions, exceptional margins and free cash flows, and long runways for sustainable, above-average growth. Most importantly, we think this well-managed business trades at a very fair price to a long- term owner.”

In addition to Adobe, Inc. (NASDAQ:ADBE), billionaire Ken Fisher has hefty stakes in Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Amazon.com, Inc. (NASDAQ:AMZN).

 

Click to continue reading and see Ken Fisher's Top 5 Growth Stock Picks.

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Disclosure. None. "That Which Drops the Most, Bounces the Most": Ken Fisher's Top 10 Growth Stock Picks is originally published on Insider Monkey.