Prolific investor Ken Fisher (Trades, Portfolio), leader of Fisher Asset Management, disclosed his first-quarter portfolio earlier this week, listing 75 new holdings.
Founded in 1979, the guru’s Camas, Washington-based firm approaches investing with the belief that supply and demand exclusively determine stock prices, and investors can only gain an advantage through finding information that is not widely known by the markets or by interpreting information differently. The firm uses a framework called The Four Market Conditions to help determine the appropriate investment strategy for the current environment.
Based on these criteria, the investor’s five largest buys for the quarter were Advanced Micro Devices Inc. (AMD, Financial), Pinduoduo Inc. (PDD, Financial), Insulet Corp. (PODD, Financial), Curtiss-Wright Corp. (CW, Financial) and PDC Energy Inc. (PDCE, Financial).
Advanced Micro Devices
Having previously exited a position in Advance Micro Devices in the first quarter of 2011, Fisher entered a new 7.13 million-share stake, giving it 0.40% space in the equity portfolio. The stock traded for an average price of $48.29 per share during the quarter.
The Santa Clara, California-based semiconductor manufacturer has a $64.99 billion market cap; its shares were trading around $55.51 on Wednesday with a price-earnings ratio of 185.03, a price-book ratio of 22.98 and a price-sales ratio of 9.27.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
GuruFocus rated Advanced Micro Devices’ financial strength 7 out of 10 on the back of sufficient interest coverage and a robust Altman Z-Score of 12.35, which indicates it is in good standing.
The company’s profitability scored a 5 out of 10 rating, driven by a strong operating margin and returns that outperform a majority of competitors. Advanced Micro also has a moderate Piotroski F-Score of 6, which implies operations are stable, and a business predictability rank of one out of five stars. According to GuruFocus, companies with this rank typically return an average of 1.1% per annum over a 10-year period.
With his purchased of 0.61% of outstanding shares, Fisher is now Advanced Micro’s largest guru shareholder. Other top investors include Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Pioneer Investments (Trades, Portfolio), Steven Cohen (Trades, Portfolio), the Signature Select Canadian Fund (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), Caxton Associates (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Joel Greenblatt (Trades, Portfolio) and Philippe Laffont (Trades, Portfolio).
Pinduoduo
The guru invested in 4.12 million shares of Pinduoduo, allocating 0.18% of the equity portfolio to the stake. During the quarter, shares traded for an average price of $36.58 each.
The Chinese company, which operates an e-commerce platform that allows users to participate in group buying deals, has a market cap of $57.95 billion; its shares were trading around $49.14 on Wednesday with a price-book ratio of 16.01 and a price-sales ratio of 12.95.
According to the median price-sales chart, the stock is overvalued.
Pinduoduo’s financial strength was rated 6 out of 10 by GuruFocus. In addition to a good cash-debt ratio of 6.17, the company is supported by a high Altman Z-Score of 4.9 that suggests financial stability.
The company’s profitability did not fare as well, scoring a 1 out of 10 rating on the back of negative margins and returns that underperform a majority of industry peers. Pinduoduo also has a moderate Piotroski F-Score of 4.
Of the gurus invested in Pinduoduo, Simons’ firm has the largest stake with 0.60% of outstanding shares. Other top guru shareholders are Chase Coleman (Trades, Portfolio), Laffont, Dalio and Ron Baron (Trades, Portfolio).
Insulet
After selling out of position in Insulet in the first quarter of 2018, the investor established a new 271,798-share holding, expanding the equity portfolio by 0.06%. The stock traded for an average per-share price of $183.11 during the quarter.
Headquartered in Massachusetts, the medical device manufacturer that specializes in diabetes care has a $12.25 billion market cap; its shares were trading around $195.90 on Wednesday with a price-earnings ratio of 1,079.49, a price-book ratio of 163.97 and a price-sales ratio of 16.4.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Insulet’s profitability and financial strength were both rated 4 out of 10 by GuruFocus. While the company has poor interest coverage, the Altman Z-Score of 7.22 suggests it is in good financial health even though its assets are building up at a faster rate than its revenue is growing.
The company also has margins and returns that outperform over half of its competitors, a moderate Piotroski F-Score of 6 and a one-star business predictability rank.
PRIMECAP Management (Trades, Portfolio) is the company’s largest guru shareholder with a 4.54% stake. Other top guru investors are Laffont, Simons’ firm, Pioneer, Greenblatt, Paul Tudor Jones (Trades, Portfolio) and Baron.
Curtiss-Wright
Having previously divested of a position in Curtiss-Wright in fourth-quarter 2019, Fisher opened a new 124,998-share holding. The trade had an impact of 0.01% on the equity portfolio. During the quarter, the stock traded for an average price of $128.97 per share.
The Davidson, North Carolina-based company, which manufactures engineered products for the commercial, defense, power generation and other industrial markets, has a market cap of $4.45 billion; its shares were trading around $104.73 on Wednesday with a price-earnings ratio of 14.43, a price-book ratio of 2.54 and a price-sales ratio of 1.81.
The Peter Lynch chart suggests the stock is trading near its fair value. The GuruFocus valuation rank of 3 out of 10, however, leans more toward overvaluation.
Driven by adequate interest coverage and a high Altman Z-Score, GuruFocus rated Curtiss-Wright’s financial strength 6 out of 10.
The company’s profitability fared even better, scoring a 9 out of 10 rating on the back of an expanding operating margin and strong returns that outperform a majority of industry peers. Curtiss-Wright also has a high Piotroski F-Score of 7, which suggests operations are healthy. Due to consistent earnings and revenue growth, it also has a 4.5-star business predictability rank. GuruFocus says companies with this rank typically return an average of 10.6% per year.
With a 3.12% stake, PRIMECAP is the company’s largest guru shareholder. Gabelli, Simons’ firm, Greenblatt, Pioneer, Jeremy Grantham (Trades, Portfolio), Ainslie and Chuck Royce (Trades, Portfolio) also have positions in the stock.
PDC Energy
The investor picked up 662,632 shares of PDC Energy, dedicating 0.01% of the equity portfolio to the holding. Shares traded for an average price of $18.30 each during the quarter.
The oil and gas producer, which is headquartered in Denver, has a $1.1 billion market cap; its shares were trading around $11.40 on Wednesday with a price-book ratio of 0.29 and a price-sales ratio of 0.6.
According to the median price-sales chart, the stock is undervalued. The GuruFocus valuation rank of 9 out of 10 also supports this assessment.
Weighed down by extremely low interest coverage, PDC Energy’s financial strength was rated 3 out of 10 by GuruFocus. The Altman Z-Score of 0.54 also warns that the company could be in danger of going bankrupt. In addition, it may not be capital efficient since the weighted average cost of capital outperforms the return on invested capital.
The company’s profitability scored a 5 out of 10 rating on the back of negative margins and returns that underperform over half of its competitors. PDC also has a moderate Piotroski F-Score of 5, has recorded a decline in revenue per share over the past 12 months and has a one-star business predictability rank.
Fisher is the company’s largest guru shareholder with 0.67% of its outstanding shares. Cohen, NWQ Managers (Trades, Portfolio), Grantham, Greenblatt, BP Capital Fund Advisors (Trades, Portfolio) and Pioneer are also invested in the stock.
Additional trades and portfolio composition
Other positions Fisher established during the quarter included Airports of Thailand PLC (AIPUY, Financial), Apergy Corp. (APY, Financial), Aurinia Pharmaceuticals Inc. (AUPH, Financial), Banco de Brasil SA BB Brasil (BDORY, Financial) and Blackstone Group Inc. (BX, Financial).
The guru’s $80.5 billion equity portfolio, which is composed of 816 stocks, is most heavily invested in the technology sector with a weight of 24.71%.
Disclosure: No positions.
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