Ken Fisher Gives Fourth Quarter Portfolio and Top Stock Picks
Fisher’s investment strategy centers on knowing information other market participants do not, while adjusting other elements of his style over time as his view of the markets evolves. It prioritizes analysis from a macro level, then countries and sectors, and finally individual stock selection.
His 2013 outlook is bullish, as he says in an interview discussing the fiscal cliff in Forbes, where he is a columnist:
“When I see big fear of potential tax hikes like now, I know that’s bullish. First, either the tax hikes don’t happen, or they’re not as bad as feared. Anyone can see how if a feared tax hike doesn’t happen, that’s a positive factor. But even if tax hikes happen as feared, vast history tells me it doesn’t have to have the big bad impact folks fear. And fear of a false factor is always bullish.”
According to his update Thursday, Fisher’s largest new stock buys in the fourth quarter were: Education Realty Trust (EDR), Mack-Cali Realty Corp. (CLI), Harris Teeter Superman (HTSI) and Elizabeth Arden Inc. (RDEN).
Education Realty Trust (EDR)
Fisher bought 3,280,938 shares of Education Realty Trust for about $10 on average in the fourth quarter.
Education Realty Trust is a REIT and one of the largest owners, developers and managers of collegiate housing in the U.S., with 60 communities in 23 states.
In the third quarter, EDR announced that it had sold 35% of the properties in its portfolio at the beginning of 2010, and has made $468 million in acquisitions and $91 in developments for the portfolio since the same time. It expects to add $343 million in developments in 2013 and 2014.
Total third quarter revenue increased to $34.5 million, from $27.9 million in the third quarter of 2011. Net income was $0.5 million, or $0.00 per diluted share, compared to a loss of $6.5 million, or $0.09 per diluted share, a year prior. Primary reasons for the improvement include: same-community NOI, operating profits of new communities, lower interest expense and a $5.2 million gain on asset sales in 2012.
The company’s cash level is $150 million, and debt and long-term liabilities total about $337 million.
Its stock price has increased 4% in the past year. Its P/B is 1.5, which is close to a three-year low, and its P/S ratio is 9.28, which is close to a three-year high.
Mack-Cali Realty Corp. (CLI)
Fisher bought 1,251,469 shares of Mack-Cali Realty for an average cost of $26 per share in the fourth quarter.
One of the largest REITs in the U.S., Mack-Cali operates high-quality office buildings and multi-family communities in the Northeast.
The company in the third quarter made $173.2 million in revenues, down slightly from $175.44 million in the third quarter of 2011. It earned $14.28 million in net income, also down slightly from $20.5 million the previous year, as it faced a tepid market. The company aims to diversify and grow in the multi-family residential space in the fourth quarter through its acquisition of the real estate development and management businesses of Roseland Partners, a multi-family residential community developer and operator in the Northeast, in addition to several of their multi-family properties.
CLI ended the quarter with approximately $166.54 million in cash and $2.23 billion in long-term liabilities and debt. A third quarter dividend of $0.45 was paid.
The stock of CLI has gained 2.7% over the past year, and at $256.63 in midday trading is near a three-year low. The company has a P/E of 34.7, P/B of 1.3 and P/S of 3.1.
Harris Teeter Supermarkets (HTSI)
Fisher bought 703,581 Harris Teeter Supermarkets shares for $38 per share on average in the fourth quarter.
A regional supermarket chain, HTSI owns 208 stores in eight states primarily throughout the southeastern and mid-Atlantic U.S. and the District of Columbia. It also has pharmacies in 143 of its supermarkets.
For the fiscal year 2012, HTSI increased sales by 5.8% to $4.54 billion from $4.29 billion, driven by increases in both its comparable stores and new stores, and partially offset by store closings. HTSI reported net earnings of $82.5 million for the year, a moderate decrease from $91.2 million in 2011.
In the fourth quarter of 2012, the company opened six new 201central stores, which feature a global selection of wine, beer, specialty foods and other merchandise. It also plans to continue its regional expansion though it is cautious for 2013 considering the economy’s impact on its customers.
The company has cash amounting to $212.2 million, increased from $164.5 million the previous year. Its long-term liabilities and debt are $332.41 million.
HTSI has a P/E of 23.5, P/B of 1.8 and P/S of 0.4.
Elizabeth Arden Inc. (RDEN)
Fisher bought 511,219 shares of Elizabeth Arden in for $46 per share on average in the fourth quarter.
Eliabeth Arden is a global prestige beauty products company selling in over 100 countries through a portfolio of prestige beauty brands including Elizabeth Arden, celebrity fragrance brands, designer fragrances and lifestyle fragrance brands.
The company in the third quarter confirmed net sales of $344.5 million, a 13.5% year-over-year increase. Net income was $2.18 million, down from $9.23 million the previous year. Sales benefited from the rollout of its innovative and revamped Elizabeth Arden products.
Elizabeth Arden has $345.92 in cash on its balance sheet and $292.97 million in long-term liabilities and debt.
The company has a P/E of 27.5; P/B of 2.8, which is close to a three-year high; and P/S of 1.1, which is close to a three-year high.
See more of Fisher’s buys and sells in his updated portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Ken Fisher.