In this article, we examined billionaire Ken Fisher's Q1 portfolio and his top 10 stocks to buy right now. You can skip our detailed analysis of Ken Fisher's history, investment philosophy, and hedge fund performance, and go directly to the Top 5 Stocks to Buy Right Now.
Fisher Asset Management has been making big gains over the last year, driven by big stakes in growth stocks. The founder and chairman of Fisher Asset Management, Ken Fisher, believes the bull run will continue into 2021 amid improving economic trends, political stability, and strengthening investor sentiments. He claims that value stocks are unlikely to seize a leadership position from growth stocks despite the fact that value stocks have outperformed growth stocks since November 6.
“After a growth stock-dominated decade, value fans are crowing. Since November 6, world value stocks are up 19.7%, beating growth stocks’ 8.7% (through 2/24, using MSCI World Growth and Value Indexes). Value bulls claim COVID vaccines and approaching business re-openings mean this is just the start of a long run—and that economically sensitive value stocks are poised for their typical, lengthy early bull market boom. Maybe. But I don’t think so, and I don’t think it matters much,” Ken Fisher said in his most recent column.
Fisher's investment firm, which is managing $159 billion worth of assets under management and $141 billion in 13F portfolio, continues adding to its top positions. The firm saw the dip in tech stock prices as a buying opportunity. Fisher Asset Management added to its 22 out of the top 25 positions. Information technology, finance, communication, and consumer discretionary are among the sectors Ken Fisher likes the most. That's why you will see a lot of tech stocks in our list of top 10 stocks to buy right now according to Ken Fisher's Q1 portfolio. The information technology sector held 26% of the overall portfolio weighting at the end of the first quarter while financial stocks represented 18% of the Fisher Asset Management 13F portfolio weighting.
Fisher's hedge fund initiated a position in 84 stocks and added to 318 existing positions during the first quarter. On the other hand, Fisher Asset Management sold out 104 positions and reduced stakes in 466 stocks. You will find major tech companies in Fisher's portfolio, including Apple Inc (NASDAQ: AAPL), Salesforce.com, Inc (NASDAQ: CRM), Adobe Inc (NASDAQ: ADBE), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and Alibaba Group Holding Limited (NYSE: BABA). These stocks comprise a major chunk of our list of top 10 stocks to buy right now based on Fisher's Q1 portfolio.
Portfolio diversification as well as the strategy of buying stocks at a discounted price has been adding to Fisher’s gains. In addition to big stakes in growth stocks, the firm has also diversified its portfolio towards energy, industrial, and consumer staples stocks. Healthcare, materials, and transportation stocks held a small percentage of the portfolio at the end of Q1.
Billionaire Ken Fisher is one of the well-known hedge fund managers. He regularly shares his ideas about the stock market and economic trends through his columns. Currently, he is a strong believer in tech stocks. Some notable holdings of Fisher include Salesforce.com, Inc (NASDAQ: CRM), Adobe Inc (NASDAQ: ADBE), Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) and Alibaba Group Holding Limited (NYSE: BABA). Ken Fisher believes tech stocks will extend the upside momentum in the years ahead. In his recent column, he advised investors to chase big, liquid, high-quality growth stocks from tech and other sectors to outperform the broader market in 2021. He believes dipping down into smaller value stocks isn’t a good idea considering the risk of losing potential future liquidity.
Ken Fisher of Fisher Asset Management
While Ken Fisher’s reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 111 percentage points since March 2017. Between March 2017 and February 5th, 2021 our monthly newsletter's stock picks returned 187.5%, vs. 75.8% for the SPY. Our stock picks outperformed the market by more than 111 percentage points. (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start digging into the top 10 stocks to buy right now according to billionaire Ken Fisher.
Top 10 Stocks to Buy Right Now
10. Salesforce.com, Inc (NASDAQ: CRM)
Shares of Salesforce.com, Inc (NASDAQ: CRM) are in the red since the beginning of this year due to easing social distancing policies and investors' shift towards value stocks. Fisher Asset Management raised its position in Salesforce.com, Inc (NASDAQ: CRM) by 3% to 1.93% of the overall portfolio at the end of the first quarter. The stock ranks 10th in the list of top 10 stocks to buy right now based on Ken Fisher's Q1 portfolio.
Polen Capital, an investment management firm, sees the dip in Salesforce stock price as a buying opportunity. Here is what Polen Capital stated:
“We opportunistically increased our weighting in Salesforce.com. After management announced the company would acquire Slack for approximately $28 billion, a high purchase price, shares came under significant pressure.
We believe the Salesforce-Slack strategic vision is on point, and although the purchase price is high in absolute dollars, it represents less than 15% of Salesforce’s market capitalization. We maintain an optimistic view of Salesforce.com, Inc (NASDAQ: CRM)'s business, its competitive positioning within enterprise software, and the rationale behind the Slack acquisition. We expect continued earnings and free cash flow growth many years into the future.”
9. Tencent Holdings Limited (OTC: TCEHY)
The investment holding company Tencent Holdings Limited (TCEHY) has been a member of Fisher Asset Management’s portfolio since 2012. The firm added more than 900,000 shares to its existing position during the first quarter this year. It is the tenth-largest stock holding of Ken Fisher’s stock portfolio, accounting for 1.90% of the overall portfolio and valued at $2.81 billion. Tencent ranks 9th in the list of top 10 stocks to buy right now. Like Apple Inc (NASDAQ: AAPL), Salesforce.com, Inc (NASDAQ: CRM), Adobe Inc (NASDAQ: ADBE) and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), Tencent is one of the top stocks to buy now based on Fisher's portfolio.
Shares of Tencent Holdings grew 6.5% since the beginning of this year, extending the twelve-month gains to 36%. The China-based company is engaged in providing value-added services (VAS) and online advertising services. It also offers online games and social network services. Its revenue has been increasing at a high double-digit rate over the past couple of years.
8. Adobe Inc. (NASDAQ: ADBE)
Ken Fisher is bullish over the future fundamentals of software company Adobe Inc (NASDAQ: ADBE). The firm first initiated a position in Adobe in 2018 and raised its existing stake by 3% to 2.01% of the overall portfolio in the first quarter, according to the latest filings. Shares of Adobe are in the red this year following a strong performance in 2020. Adobe Inc (NASDAQ: ADBE) ranks 8th in the list of top 10 stocks to buy right now.
Polen Capital, an investment management firm, stated in the first quarter investor letter that Adobe and Autodesk were among the biggest detractors. Here is what Polen Capital stated:
“Adobe Inc (NASDAQ: ADBE) and Autodesk are both prime examples of the rotation that occurred during the quarter. Both are dominant businesses in their respective markets, which are experiencing structural tailwinds. Despite each business’s position of strength, the stocks of cyclicals and businesses with higher leverage and lower profitability were more favored this past quarter. In stark contrast, Adobe Inc (NASDAQ: ADBE) and Autodesk both have low leverage, high levels of profitability, high recurring revenues that mitigate cyclicality, and are both capital-light business models—all attributes we appreciate as investors. Adobe and Autodesk were also two of the top three performers within the Portfolio during 2020.”
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
The chip-maker Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) is the long-running stock holding of Fisher Asset Management. The firm first initiated a position in TSM in 2002 and slashed its stake by 3% during the first quarter. Despite that, Taiwan Semiconductor accounted for 2.22% of the overall portfolio and it is the seventh-largest stock holding, according to the latest filings.
Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) ranks 7th in the list of top 10 stocks to buy right now.
Shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) remained under pressure since the beginning of this year. However, its stock price is still up 115% in the last twelve months. Its revenue growth in the past three years averages around 12%. The company generated $12.79 billion in the first-quarter revenue, up 24% from the year-ago period.
6. Alibaba Group Holding Limited (NYSE: BABA)
The Chinese e-commerce giant Alibaba Group Holding Limited (NYSE: BABA) is the seventh-largest stock holding of Ken Fisher’s portfolio. Fisher's hedge fund has been holding a position in BABA since 2015. At the end of the first quarter, Alibaba accounted for 2.22% of the overall portfolio. Like Apple Inc (NASDAQ: AAPL), Salesforce.com, Inc (NASDAQ: CRM), Adobe Inc (NASDAQ: ADBE) and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM), BABA is one of the best stocks to buy now based on Fisher's portfolio.
BABA ranks 6th in the list of top stocks to buy right now based on Ken Fisher's portfolio.
Polen Capital also mentioned Alibaba in the first quarter investor letter. Here is what Polen Capital stated:
“In the case of Alibaba, two significant news events impacted the company’s shares in the last few months of 2020. First, the Chinese government intervened to halt–for an undetermined period of time–Ant Group’s IPO. Alibaba owns 33% of Ant Group, and Ant Group’s “Alipay” application facilitates financing and payments around the Alibaba ecosystem. Second, rumors of Chinese regulatory oversight in the internet space were solidified at the end of 2020 when China’s State Administration for Market Regulation announced an investigation under the nation’s AntiMonopoly Law. In combination, these events contributed to a selloff in BABA shares that resulted in a roughly 30% decline from highs in late October 2020.
We view Alibaba as arguably one of the most dominant businesses in the world.
We believe the company is also playing an integral role in China’s ambitions to reorient its economy from one that is export-driven to one that is domestically consumption-driven. Alibaba Group Holding Limited (NYSE: BABA) marketplaces—TaoBao and Tmall—in combination with its logistics capabilities may well provide the most efficient way to purchase and receive goods in many of China’s lower-tier cities. Important to the investment case, Alibaba’s core commerce business continues to compound at high rates while enjoying low total addressable market penetration and multiple competitive advantages, not the least of which consist of two-sided network effects between merchants and consumers. At approximately 19x next twelve month’s earnings, we think Alibaba Group Holding Limited (NYSE: BABA) will provide a favorable investment outcome even if it must pay fines or modify some business practices. We continue to expect earnings growth in excess of 20% over the next three to five years. Even if earnings growth were to fall to 15%, we think it would still result in a favorable outcome at the price at which we added to the position.”
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Disclosure: None. Top 10 Stocks to Buy Right Now is originally published on Insider Monkey.