Ken Fisher Trims Top Holdings Apple And Visa, Boosts ETF

Summary

Prolific investor Ken Fisher ( Trades , Portfolio ), leader of Fisher Asset Management, disclosed his third-quarter portfolio earlier this week.

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 entered 77 new positions during the three months ended Sept. 30, sold out of 52 stocks and added to or trimmed a slew of other existing investments. The most notable trades for the period included reductions in the Visa Inc. V +1.2% ( V , Financial ) and Apple Inc. ( AAPL , Financial ) stakes and boosts to the Facebook Inc. FB +2.3% ( FB , Financial ), Advanced Micro Devices Inc. ( AMD , Financial ) and Vanguard Intermediate-Term Corporate Bond ETF ( VCIT , Financial ) holdings.

Visa

With an impact of -0.78% on the equity portfolio, Fisher curbed his Visa ( V , Financial ) stake by 22.45%, selling 5.3 million shares. The stock traded for an average price of $234.41 per share during the quarter.

The guru now holds 18.3 million shares, representing 2.54% of the equity portfolio. GuruFocus estimates he has gained 166.65% on the long-held investment, which is now his sixth-largest holding.

The San Francisco-based company, which facilitates electronic payments and provides credit card services, has a $487.9 billion market cap; its shares were trading around $221.70 on Wednesday with a price-earnings ratio of 44.91, a price-book ratio of 14.08 and a price-sales ratio of 22.15.

The GF Value Line VALU +6.5% suggests the stock is fairly valued currently based on its historical ratios, past performance and future earnings projections.

GuruFocus rated Visa’s financial strength 6 out of 10 on the back of adequate interest coverage. In addition, the high Altman Z-Score of 8.15 indicates it is in good standing. The return on invested capital also overshadows the weighted average cost of capital, indicating value is being created as the company grows.

The company’s profitability fared better, scoring a 9 out of 10 rating on the back of operating margin expansion and strong returns on equity, assets and capital that outperform a majority of competitors. It also has a moderate Piotroski F-Score of 5 out of 9, indicating conditions are typical for a stable company. Although Visa has recorded a slowdown in revenue per share growth over the past 12 months, it still has a five-star predictability rank. According to GuruFocus, companies with this rank return an average of 12.1% annually over a 10-year period.

Despite the reduction, Fisher remains Visa’s largest guru shareholder with 0.86% of its outstanding shares. Other gurus with significant positions in the stock include Frank Sands ( Trades , Portfolio ), Warren Buffett ( Trades , Portfolio ), Pioneer Investments, Chuck Akre ( Trades , Portfolio ), Spiros Segalas ( Trades , Portfolio ), PRIMECAP Management ( Trades , Portfolio ), Andreas Halvorsen ( Trades , Portfolio ), Daniel Loeb ( Trades , Portfolio ), Diamond Hill Capital ( Trades , Portfolio ), Steven Cohen ( Trades , Portfolio ) and Mairs and Power ( Trades , Portfolio ).

Apple

Impacting the equity portfolio by -0.34%, the investor reduced his Apple ( AAPL , Financial ) position by 6.13%, dumping 3.9 million shares. During the quarter, shares traded for an average price of $147.22 each.

Fisher now holds 60.8 million shares, accounting for 5.36% of the equity portfolio. As his largest holding, GuruFocus data shows he has gained an estimated 259.04% on the investment over its long lifetime.

Headquartered in Cupertino, California, the tech giant, which is known for the iPhone and Mac computer, has a $2.46 trillion market cap; its shares were trading around $148.85 on Wednesday with a price-earnings ratio of 29.12, a price-book ratio of 38.32 and a price-sales ratio of 7.3.

According to the GF Value Line, the stock is significantly overvalued currently.

Apple’s financial strength was rated 5 out of 10 by GuruFocus. On top of a comfortable level of interest coverage, the robust Altman Z-Score of 7.73 indicates the company is in good standing. The ROIC also eclipses the WACC by a wide margin, indicating good value creation is occurring.

The company’s profitability scored an 8 out of 10 rating. Even though the operating margin is in decline, Apple is […]

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