Although he pioneered small cap value investing, Ken Fisher's top 4 positions are "Magnificent"

He's one of the world's wealthiest hedge fund managers. And he's betting on the AI trade - big time.
Hans Lee

Livewire Markets

As quickly as the term spread like wildfire in financial markets, the inventor of the term "Magnificent Seven" believes that the era of seven huge out-performers has ended. Furthermore, he now expects the divergence between these winners to accelerate.

"This big rising tide of seven names lift[ing] all boats in the stock market, is what I see ending," Mike O'Rourke, chief market strategist at Jones Trading said. "I don't see these seven names rising together."

But just because the stock prices are diverging doesn't mean that all investors have given up - or are selling - all seven stocks. The perfect example of this is found in the portfolio of Ken Fisher. The executive chairman and co-chief investment officer of his eponymous firm, Fisher turned $250 (in 1979) into $200 billion (today) through a valuation metric that he invented himself. 

In this wire, we'll introduce you to Ken Fisher - and some of the moves he made during the fourth quarter of 2023 in the latest edition of our 13F series (co-authored by Kerry Sun and myself). 

Meet Ken

Ken Fisher
Ken Fisher

Born and raised in San Francisco, Fisher was always destined to be a great investor - because it was in his blood (literally). His father, Philip Arthur Fisher, was one of the first proponents of growth investing alongside Thomas Rowe Price Jr (yes, that T. Rowe Price). 

A high school dropout, Fisher first worked at his father's firm before branching out in 1979. He started the company with just $250. By 1993, the firm hit the milestone of exceeding $1 billion in assets under management (AUM). The global money management firm now has more than $200 billion in AUM, with clients and staff spread out all over the world. 

Fisher (Junior) is best known for creating the price-to-sales ratio as a form of investment analysis. The tool was used to identify undervalued stocks for decades. He was also an early proponent of small-cap value-oriented investing, an approach now used by such investors as IML's Simon Conn, 1851 Capital's Chris Stott, and Marcus Burns at Spheria

Finally, Fisher is also well-known as a prolific author and market commentator. His Forbes column ran for 33 years and some of his work is still published in The Australian. He's also prolific on X!

Ken's 13F filing (Q4 2023)

Top Buys
Advanced Micro Devices (NASDAQ: AMD) +0.44%
Salesforce (NASDAQ: CRM) +0.3%
Microsoft (NASDAQ: MSFT) +0.24%
Broadcom (NASDAQ: AVGO) +0.2%

Top Sells
NextEra Energy (NYSE: NEE) -0.32%
PepsiCo (NASDAQ: PEP) -0.21%
Oracle (NASDAQ: ORCL) -0.17%
Johnson & Johnson (NYSE: JNJ) -0.17%
Itau Unibanco ADR (NYSE: ITUB) -0.11%

Top Holdings (by % and value)
Apple (NASDAQ: AAPL) 5.2% US$10.5 billion
Microsoft (NASDAQ: MSFT) 4.7% US$9.6 billion
Amazon (NASDAQ: AMZN) 3.16% US$6.4 billion
Alphabet (NASDAQ: GOOGL) 3.11% US$6.3 billion
Vanguard Intermediate Corporate Bond ETF (NYSE: VCIT) 2.93% US$5.95 billion

Note: NVIDIA is Fisher's sixth-largest position. Fisher also added to all of his top five positions in the last quarter. 

Source: Whale Wisdom

Insights from the Filing

Ken loves the Magnificent Seven

For all the talk that the Magnificent Seven are finished, Fisher certainly doesn't believe it. Five of the Magnificent Seven are in his top positions. He's also been adding to some growth-oriented positions like Broadcom, AMD, and Salesforce. It suggests, if anything, that Fisher is a huge believer in the AI megatrend. He also appears to be a fan of selling old-world names like Pepsi and Johnson & Johnson. 

In one of his columns for The Australian, Fisher made the case for AI while admitting that making an initial position in the theme is a bad idea:

"Even after Silicon Valley’s gruelling start-up shakeout, excess enthusiasm over tiny AI pure-plays remains. Buying within them now is buying hype high. With oodles of ChatGPT clones already available, which start-up will build the profit margins to justify premium valuations? You can’t know," Fisher wrote recently.

Fisher's purchases may signal how he feels about the broader market

Another column he wrote in The National probably espouses Fisher's market-wide view as well - spoiler alert: he's bullish.

"Higher-for-longer interest rates! Global economic malaise! Escalating regional wars! You know all the reasons bears say this bull market is definitively doomed, extending their 2023 arguments.
Wrong again. Markets move on what people do not widely know and watch – surprises, positive or negative.
This year, those surprises will be to the upside – shocking everyone again, like 2023."

And before you say that this guy is just riding on coattails, he did predict the bull market in stocks in 2023 and he thinks strength will broaden out (i.e. gains will not come from just the Magnificent Seven) by the middle of the year.

Finally, Fisher on China

While it's not immediately obvious here, Fisher's 10th largest position is TSMC (NASDAQ: TSM). And that's crucial because his AI play is based in Taiwan. His view on mainland China, in contrast, is decidedly bearish - as this New York Post column demonstrates:

"Official data say China grew 5% in 2023, nailing governmental targets. Markets know better. Were that even close to true, global firms’ Chinese sales would be up. They’re not. Most firms – among them Apple, Volkswagen, Procter & Gamble, L’Oreal – have been reporting declining sales in China."
"In sum, there’s no middle ground for the Middle Kingdom: Unless it reverses course, re-embracing capitalism’s magic, China’s golden goose is cooked. That goes for its military might, too. (Military capability always follows economic vibrancy.)"
Livewire gives readers access to information and educational content provided by financial services professionals and companies (“Livewire Contributors”). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

4 contributors mentioned

Hans Lee
Senior Editor
Livewire Markets

Hans leads the team's coverage of the global economy and fixed income. He is the creator and moderator of Signal or Noise, Livewire's multimedia series dedicated to top-down investing.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.


Sign In or Join Free to comment