generic Ken Fisher Strategy: 10 New Stock Picks
In this article, we discuss the 10 new stock picks of Ken Fisher. If you want to see more stocks in this selection, check out Ken Fisher Strategy: 5 New Stock Picks.
Fisher Asset Management’s investment philosophy consists of a fundamental belief in capitalism. The investment firm believes that demand and supply of stocks are the single determinants of pricing. Fisher Asset Management deploys capital markets technology to assess new value-adding opportunities in the market, relying on the study of finance theory, history, and empiricism.
Ken Fisher believes that the US economy will not slip into a recession, although the billionaire forecasts that the Federal Reserve cannot control inflation with its current policies. As of the third quarter of 2022, Fisher manages a portfolio of securities worth $133.40 billion, with investments focused on the communications, consumer discretionary, energy, finance, healthcare, and information technology sectors.
The 13F filings for Q3 2022 reveal that Fisher Asset Management added 107 new stocks to its portfolio, made additional purchases in 329 equities, sold out of 82, and reduced holdings in 449 names. Some of the new stocks that Fisher picked up in the September quarter include The Charles Schwab Corporation (NYSE:SCHW), Johnson Controls International plc (NYSE:JCI), and GSK plc (NYSE:GSK).
Our Methodology
We selected the top 10 new stocks from the Ken Fisher portfolio as of the end of the third quarter of 2022 for this analysis. Ken Fisher's fund initiated new positions in these companies in the third quarter. The stocks are arranged according to the hedge fund’s stake value in each holding. Insider Monkey’s database of 895 elite hedge funds tracked as of the end of the second quarter of 2022 was used to assess the hedge fund sentiment around the securities.
Ken Fisher Strategy: New Stock Picks
10. The Goodyear Tire & Rubber Company (NASDAQ:GT)
Number of Hedge Fund Holders: 30
Fisher Asset Management’s Stake Value: $28,314,000
The Goodyear Tire & Rubber Company (NASDAQ:GT) was incorporated in 1898 and is headquartered in Akron, Ohio. The company manufactures, distributes, and sells various lines of tires for automobiles, trucks, buses, aircrafts, motorcycles, earthmoving equipment, and mining and industrial equipment under the Goodyear, Cooper, Dunlop, Kelly, Debica, Sava, Fulda, Mastercraft, and Roadmaster brands.
Securities filings for the third quarter of 2022 reveal that Ken Fisher added The Goodyear Tire & Rubber Company (NASDAQ:GT) to his portfolio by acquiring 2.80 million shares worth $28.3 million, representing 0.02% of the total holdings.
On October 31, The Goodyear Tire & Rubber Company (NASDAQ:GT) reported Q3 non-GAAP earnings per share of $1.07, beating Wall Street estimates by $0.52. The revenue climbed 7.7% year-over-year to $5.31 billion but missed market forecasts by $30 million.
Deutsche Bank analyst Emmanuel Rosner on November 2 maintained a Hold rating on The Goodyear Tire & Rubber Company (NASDAQ:GT) but lowered the price target on the shares to $10 from $14. The analyst sees the "sharp negative market" reaction to The Goodyear Tire & Rubber Company (NASDAQ:GT)’s Q3 print as justified, in light of the "increasingly challenging operating environment ahead for the company."
According to Insider Monkey’s data, 30 hedge funds were bullish on The Goodyear Tire & Rubber Company (NASDAQ:GT) at the end of Q2 2022, compared to 33 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is the biggest position holder in the company, with 3.2 million shares worth $35 million.
In addition to The Charles Schwab Corporation (NYSE:SCHW), Johnson Controls International plc (NYSE:JCI), and GSK plc (NYSE:GSK), The Goodyear Tire & Rubber Company (NASDAQ:GT) is one of the newest picks from the Ken Fisher portfolio.
Here is what ClearBridge Small Cap Value Strategy has to say about The Goodyear Tire & Rubber Company (NASDAQ:GT) in its Q3 2022 investor letter:
“We exited a number of stocks during the period, including Goodyear Tire & Rubber (NASDAQ:GT). We sold our position in Goodyear due to the cavalcade of concerns including the company’s elevated debt levels, inflationary pressures from higher input prices, continued manufacturing challenges in the auto industry and complications with the company’s manufacturing volume. With substantial exposure to the automotive industry through other portfolio holdings, we elected to consolidate our exposure within those higher-conviction holdings."
9. Nordstrom, Inc. (NYSE:JWN)
Number of Hedge Fund Holders: 31
Fisher Asset Management’s Stake Value: $28,921,000
Nordstrom, Inc. (NYSE:JWN) is a Washington-based fashion retailer that manufactures and markets apparel, footwear, beauty products, accessories, and home goods through Nordstrom branded stores and online channels. In Q3 2022, Ken Fisher purchased 1.7 million shares of Nordstrom, Inc. (NYSE:JWN) worth about $29 million. In mid-October, Nordstrom, Inc. (NYSE:JWN) reiterated its previously forecast FY22 adjusted EPS of $2.30 to $2.60 and revenue growth of 5% to 7%. Market consensus for EPS stood at $2.34 and $15.58 billion for sales.
On November 14, Deutsche Bank analyst Gabriella Carbone reaffirmed a Hold rating on Nordstrom, Inc. (NYSE:JWN) but trimmed the price target on the shares to $22 from $23 ahead of the Q3 results. The analyst believes investor sentiment will remain largely negative on the apparel retail sector until there is improved visibility around inventory and consumer demand heading into fiscal 2023.
Among the hedge funds tracked by Insider Monkey, Nordstrom, Inc. (NYSE:JWN) was part of 31 public stock portfolios at the end of Q2 2022, compared to 29 in the prior quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the largest stakeholder of the company, with 5.4 million shares worth $115.70 million.
Here is what Mayar Capital specifically said about Nordstrom, Inc. (NYSE:JWN) in its second quarter 2022 investor letter:
“The second thought experiment comes from my own personal experience in the period around the financial crisis. In 2006 I made an investment in the shares of Nordstrom, Inc. (NYSE:JWN). Over the following three-and-a-half years, the stock was up by 36%, outperforming the S&P 500 by a very respectable 41.4%. A fund made up of a single holding in Nordstrom would have ranked in the top 1% of all funds in the Morningstar database.
However, Nordstrom stock declined by a very painful 80% during 2008. A single-stock fund would have almost certainly liquidated during that drawdown, taking investors out of the game and ending any hope of them ever realizing the return. But because my portfolio was diversified, it held its value a bit better (it declined by 25% while the market was down by 38%), allowing me to sell some holdings and redeploy money into investments like Nordstrom that had declined severely.”
8. KB Financial Group Inc. (NYSE:KB)
Number of Hedge Fund Holders: 6
Fisher Asset Management’s Stake Value: $30,393,000
KB Financial Group Inc. (NYSE:KB) is headquartered in Seoul, and the company provides banking and financial services to consumers and enterprises in South Korea and internationally. The company operates through Corporate Banking, Retail Banking, Other Banking Services, Securities Business, Non-life Insurance Business, Credit Card Business, and Life Insurance Business segments. On October 25, KB Financial Group Inc. (NYSE:KB) reported a Q3 net profit of WON1.2 trillion and a net interest income of WON2.89 trillion.
As per the 13F filings for the third quarter of 2022, Ken Fisher’s Fisher Asset Management added KB Financial Group Inc. (NYSE:KB) to its portfolio by purchasing over 1 million shares worth $30.3 million, representing 0.02% of the total securities.
According to the second quarter database of Insider Monkey, 6 hedge funds reported owning stakes worth $51.4 million in KB Financial Group Inc. (NYSE:KB), compared to 7 funds in the prior quarter worth $43.7 million. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital is the biggest position holder in the company, with 774,872 shares valued at $28.8 million.
7. Parker-Hannifin Corporation (NYSE:PH)
Number of Hedge Fund Holders: 35
Fisher Asset Management’s Stake Value: $34,995,000
Parker-Hannifin Corporation (NYSE:PH) is headquartered in Cleveland, Ohio, and the company manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. In the third quarter of 2022, Ken Fisher opened a new position in Parker-Hannifin Corporation (NYSE:PH) by purchasing 144,423 shares worth nearly $35 million.
On October 26, Parker-Hannifin Corporation (NYSE:PH) declared a quarterly dividend of $1.33 per share, in line with previous. The dividend is distributable on December 2, to shareholders of record on November 14. Parker-Hannifin Corporation (NYSE:PH)’s dividend yield on November 15 came in at 1.71%.
Citi analyst Timothy Thein on October 14 resumed coverage of Parker-Hannifin Corporation (NYSE:PH) with a Neutral rating and a $285 price target, suggesting 12% total return potential. The analyst expects less earnings volatility compared to past cycles, but said it will likely take some time for Parker-Hannifin Corporation (NYSE:PH) to prove this to investors. Further weakening in manufacturing data may result in a more attractive entry point for the stock, the analyst told investors in a research note.
According to Insider Monkey’s data, 35 hedge funds were bullish on Parker-Hannifin Corporation (NYSE:PH) at the end of Q2 2022, compared to 39 funds in the prior quarter. Andreas Halvorsen’s Viking Global is the leading position holder in the company, with more than 3 million shares worth $755.5 million.
Here is what Oakmark Fund specifically said about Parker-Hannifin Corporation (NYSE:PH) in its second quarter 2022 investor letter:
“Parker-Hannifin Corporation (NYSE:PH), a U.S. company that specializes in motion and control technologies, is suffering from what we believe are investor misunderstandings and misjudgments, despite the efforts of the company’s unusually strong management team. In our opinion, since his promotion in 2015, CEO Thomas Williams has vastly improved operations and shifted the product portfolio to longer cycled, higher growth, higher margin and higher return end markets. The results are impressive. Margins, returns and earnings have increased substantially. With the expected closing of the Meggitt acquisition in the September quarter, the highly depressed aerospace segment will be its largest end market. We anticipate a rebound in aerospace revenue, which—combined with the company’s strong position in attractive businesses, including clean technologies and factory automation—should accelerate revenue growth. Parker Hannifin trades at a discount to other high-quality industrials, which we believe is unwarranted since its growth and returns should be similar or better. At a low-teens multiple of next year’s normalized cash earnings, Parker Hannifin is an attractive investment, in our view.”
6. The Gap, Inc. (NYSE:GPS)
Number of Hedge Fund Holders: 27
Fisher Asset Management’s Stake Value: $40,212,000
The Gap, Inc. (NYSE:GPS) is a California-based apparel retail company that sells its products under the Old Navy, Gap, Banana Republic, and Athleta brands. Ken Fisher added The Gap, Inc. (NYSE:GPS) to his Q3 2022 portfolio by buying 4.8 million shares worth $40.2 million.
On November 8, The Gap, Inc. (NYSE:GPS) declared a $0.15 per share quarterly dividend, in line with previous. The dividend is payable on January 25, 2023 to shareholders of the company as of January 4. The Gap, Inc. (NYSE:GPS)’s dividend yield on November 15 came in at 4.67%.
Citi analyst Paul Lejuez on November 11 raised the price target on The Gap, Inc. (NYSE:GPS) to $8 from $7 and kept a Sell rating on the shares. The analyst expects the company's Q3 results to miss the consensus comp estimate of 3% and deliver a softer than expected gross margin.
Among the hedge funds tracked by Insider Monkey, 27 funds reported owning stakes worth $234.3 million in The Gap, Inc. (NYSE:GPS) at the end of June 2022, compared to 23 funds in the earlier quarter worth $247.7 million. Richard S. Pzena’s Pzena Investment Management held the biggest stake in the company, comprising approximately 10 million shares valued at $82.3 million.
Like The Charles Schwab Corporation (NYSE:SCHW), Johnson Controls International plc (NYSE:JCI), and GSK plc (NYSE:GSK), The Gap, Inc. (NYSE:GPS) is one of the latest stock picks of Ken Fisher.
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Disclosure: None. Ken Fisher Strategy: 10 New Stock Picks is originally published on Insider Monkey.
