Fisher Asset Management leader Ken Fisher (Trades, Portfolio) disclosed that he established 229 new positions when he released his first-quarter portfolio this week.
The investor’s top five new buys for the quarter were Lennar Corp. (LEN, Financial), Core Laboratories NV (CLB, Financial), Keane Group Inc. (FRAC, Financial), Range Resources Corp. (RRC, Financial) and iShares U.S. Health Care Providers (IHF, Financial).
Lennar
After exiting a position in Lennar in the third quarter of 2017, Fisher established a 2.12 million-share stake for an average price of $62.30 per share, giving it 0.15% portfolio space.
The Miami-based homebuilder has a market cap of $17.89 billion; its shares were trading around $55.54 on Friday with a price-earnings ratio of 14.83, a price-book ratio of 1.38 and a price-sales ratio of 1.01.
The Peter Lynch chart below shows the stock is trading near its fair value.
GuruFocus rated Lennar’s financial strength 4 out of 10 as its Altman Z-Score of 2.46 indicates it is under minor financial stress. While the company has issued $1.3 billion in new long-term debt over the past several years, it is at a manageable level. The company’s profitability and growth was rated 7 of 10, boosted by an expanded operating margin and a one-star (out of five) business predictability rating. The Piotroski F-Score of 3, however, suggests poor business operations.
Of the gurus invested in Lennar, Andreas Halvorsen (Trades, Portfolio) has the largest position with 2.28% of outstanding shares. Other guru shareholders include Daniel Loeb (Trades, Portfolio), Third Avenue Management (Trades, Portfolio), Jim Simons (Trades, Portfolio), Ken Heebner (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Ron Baron (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).
Core Laboratories
Fisher invested in 446,752 shares of Core Laboratories for an average price of $110.67 per share, expanding the portfolio0.06%.
Headquartered in the Netherlands, the oil services company has a market cap of $5.38 billion; its shares were trading around $121.53 on Friday with a price-earnings ratio of 64.78, a price-book ratio of 37.11 and a price-sales ratio of 8.19.
According to the Peter Lynch chart below, the stock is overpriced as it is trading higher than its fair value.
Core Laboratories’ financial strength and profitability and growth were both rated 6 out of 10 by GuruFocus. The company has a sufficient level of interest coverage, which exceeds Benjamin Graham’s threshold of 5, and a strong Altman Z-Score of 9.46. Although its operating margin has declined over the past several years, it still outperforms 88% of competitors. The company also has a high Piotroski F-Score of 8 and a one-star business predictability rating, which indicate good business operations.
With 2.09% of outstanding shares, David Rolfe (Trades, Portfolio) is the company’s largest guru shareholder. John Rogers (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Columbia Wanger (Trades, Portfolio) and Simons are also shareholders.
Keane Group
The guru purchased 3.2 million shares of Keane Group, which went public last year, for an average price of $6.36 per share. The trade had an impact of 0.06% on the portfolio.
The Houston-based oil services company, which provides integrated well completion services, has a market cap of $1.73 billion; its shares were trading around $15.45 on Friday with a price-book ratio of 3.34 and a price-sales ratio of 1.14.
Based on the median price-sales chart below, the stock is trading below its historical value.
Keane’s financial strength was rated 6 out of 10 by GuruFocus, boosted by its strong Altman Z-Score of 3.64. Its interest coverage of 0.12, however, is insufficient as it falls well below Graham’s standard of 5. Despite having a strong Piotroski F-Score of 7, the company’s profitability and growth was rated 4 of 10. In addition, its operating margin outperforms 54% of competitors.
With his purchase, Fisher became the company’s largest guru shareholder with 2.85% of its outstanding shares. Leon Cooperman (Trades, Portfolio), Cohen and Jones also own the stock.
Range Resources
Fisher bought 2.6 million shares of Range Resources for an average price of $14.95 per share, giving it 0.05% portfolio space.
The Fort Worth, Texas-based oil and gas producer has a market cap of $3.44 billion; its shares were trading around $13.82 on Friday with a price-earnings ratio of 10.32, a price-book ratio of 0.59 and a price-sales ratio of 1.42.
The Peter Lynch chart below suggests the stock is undervalued as it is trading below its fair value.
Hurt by poor interest coverage and a low Altman Z-Score of 0.63, which indicates the possibility of bankruptcy in the near future, Range Resources’ financial strength was rated 4 out of 10 by GuruFocus. Its profitability and growth was rated 6 of 10 as it has a high Piotroski F-Score of 8, a one-star business predictability rating and its operating margin outperforms 79% of competitors.
With his purchase of 1.04% of the company’s outstanding shares, Fisher became its largest guru shareholder. Richard Snow (Trades, Portfolio), Wallace Weitz (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), T Boone Pickens (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Cohen and Arnold Schneider (Trades, Portfolio) also have positions in the stock.
iShares U.S. Health Care Providers
Fisher invested in 216,766 units of the exchange-traded fund for an average price of $162.48 per unit, expanding the portfolio 0.04%.
The ETF, which tracks the performance of an index composed of stocks in the U.S. health care providers sector, has a market cap of $495 million; it was trading around $164.92 on Friday with a price-earnings ratio of 19.09 and a price-book ratio of 2.60.
The ETF’s 14-day relative strength index is 60.26, which indicates it is neither overbought nor oversold.
Other gurus invested in the ETF include Chase Coleman (Trades, Portfolio), Carl Icahn (Trades, Portfolio), First Eagle Investment (Trades, Portfolio) and Cohen.
Other trades
During the quarter, Fisher also established positions in PowerShares DWA Financial Momentum Portfolio (PFI, Financial), ProPetro Holding Corp. (PUMP, Financial), PowerShares Dynamic Large- Cap Value (PWV, Financial), Southwestern Energy Co. (SWN, Financial) and iShares Edge MSCI Min. Vol. Japan (JPMV, Financial), among others.
According to its website, the value firm uses a top-down approach to identify “the countries and sectors most likely to generate the highest expected returns.” Fisher’s vast portfolio of 982 holdings is largely invested in the technology and financial services sectors. According to GuruFocus, the firm’s Purisima Fund outperformed the S&P 500 in 2015 with a 1.77% return. The index returned 1.38%.
Disclosure: No positions.
