Charlie Munger offers a valuable nugget of investing advice: "Carefully look at what other great investors have done." Fortunately for us, some of the biggest and brightest investors must divulge their stock positions each quarter, providing insight into the stock moves of money pros like billionaire and successful fund manger Ken Fisher.
Favorite five
Based on its 13F SEC filing for Q1 2013, most of Fisher's top stock positions cover the health care, financial services, industrials, and tech sectors. Let's zero in on five of these megacap companies and examine some possible reasons Fisher likes these stocks in particular.
Pfizer (NYSE: PFE )
Representing 2.36% of Fisher's portfolio, Pfizer is its largest stock holding. After making many acquisitions over the past several years, Pfizer is now focused on divesting its non-core business. The company recently launched an IPO of a minority stake in its Animal Health business, Zoetis. And despite the patent expiration on Lipitor, Pfizer boasts a robust drug pipeline including products for stroke prevention, rheumatoid arthritis, and cancer.
American Express (NYSE: AXP )
American Express boasts an esteemed brand and a unique business model that benefits from how much money cardholders spend, and it's less dependent on an interest-rate spread. The company's focus on affluent consumers also enables it to grow despite overall household deleveraging. American Express represents about 2% of Fisher's holdings.
General Electric (NYSE: GE )
Representing 1.85% of Fisher's holdings, General Electric has recently faced profitability pressures because of high input costs, tough pricing, and competition in key markets such as wind turbines. Over time, the company should benefit from emerging-market growth, but these ongoing challenges will probably continue for the foreseeable future.
Wells Fargo (NYSE: WFC )
Undoubtedly, the prolonged low-interest-rate environment has presented a challenge for banks. But Wells Fargo is in a solid position because of its dominant market share in mortgage origination. Its diversified sources of fee revenue will probably benefit the company as well. The company represents 1.8% of Fisher's fund.
Apple (NASDAQ: AAPL )
While Apple retains a desirable position in smartphones and tablets, the company's market share has declined in recent quarters. Despite the harsh reality of an increased competitive environment, the iDevice maker's ability to produce and sell wildly sought-after products to its cult-like customer base, coupled with its strong financial position, set the company up nicely for potential future success. Roughly 1.8% of Fisher's fund is invested in Apple stock.
Foolish final thoughts
Of these five stocks, I particularly like Apple and Wells Fargo. Apple looks incredibly attractive with its forward price-to-earnings ratio of 10, a discount compared with the rest of the industry. Meanwhile, Wells' strong mortgage origination market share paired with low borrowing rates and a recovering housing market position it as an enticing opportunity right now.
There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.
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