Billionaire Ken Fisher: Legendary Investor or Marketing Genius? (Updated)

Insider Monkey Staff

Billionaire Ken Fisher is in hot water because of his sexual comments at a financial services conference. Fisher is known for his prestigious Forbes column, titled “Portfolio Strategy”, which he has been writing since 1984, which makes him the longest-running columnist in the publication’s history. He also has written 11 books, four of which became New York Times bestsellers and has published many papers. However, Mr. Fisher, who has a net worth of around $4 billion, is mainly known as the founder, chairman, and ex-CEO of Fisher Investments, a financial adviser with offices in the US, England, and Germany.

Fisher Investments was founded in 1979 and Ken Fisher had served as the company’s CEO until 2016, when he was succeeded by Damien Ornani. Mr. Fisher still has an active role at the company, as he is executive chairman and co-chief investment officer. Ken Fisher is a brilliant marketer targeting wealthy people, with an investment minimum of $500,000. The fund charges a flat fee that varies between 1% and 1.5% depending on the size of the portfolio. He definitely knows how to get his clients write big checks. Ken Fisher got into trouble in October after using the words "trying to get into a girl's pants" and allegedly lost $1 billion in clients' funds. Ken Fisher's publicist sent us the following clarification regarding this incident: "Ken was speaking about mistakes that certain salespeople in the financial services industries make when trying to recruit new clients, and he said that many of them mistakenly treat it like a man making a lewd and inappropriate proposition to a woman at a bar. He was denouncing that approach."

We don't really know Ken Fisher's exact performance figures. There are a couple of attempts we will share though. The first one was calculated by Forbes, based on his public stock picks revealed in his columns. The publication estimated in 2015, that over the previous 18 years, Mr. Fisher outperformed the broad US stock market by an average of 4.2 percentage points annually. Keep in mind that these are probably his "best stock picks". He shares them as part of his marketing strategy. His actual returns are likely to be worse than this figure.

The second attempt is made by Meb Faber, the co-founder and CIO of Cambria Investment Management. Faber published Ken Fisher’s returns in an article posted on his blog. According to Faber, between 1995 and 2014, Mr. Fisher’s picks lagged behind the MSCI World Index in 10 years, including four consecutive years between 2011 and 2014. We profile Ken Fisher in detail in a separate article and went over his fund and returns. Please read that article for more information.

Ken Fisher - FISHER ASSET MANAGEMENT

When we go through Fisher's top stock picks we noticed that his top stock picks are among the largest companies in the world. It looks like Fisher's investment approach resembles the investment approach of a passive index fund. However, we also noticed that it doesn't follow the S&P 500 Index perfectly. So, there is some stock picking involved. For example, Fisher's top position is Visa Inc (NYSE: V). Fisher allocated $3.4 billion to Visa, 3.8% of his 13F portfolio, and currently control 0.9% of Visa's outstanding shares.

Fisher's second, third, and fourth biggest positions are Apple Inc. (NASDAQ: AAPL), Amazon.com Inc. (NASDAQ: AMZN), and Microsoft Corp (NASDAQ: MSFT). Fisher allocated $3.15 billion to Apple Inc, $3.06 billion to Amazon.com Inc., and $2.97 billion to Microsoft Corp. These three stocks are the three largest stocks trading in US markets and Fisher allocated very similar weights to these stocks. This means Fisher favors Visa over the biggest stocks and Amazon is his favorite mega-cap stock with a slight edge over Microsoft and Apple.

Fisher's fifth biggest position is Alibaba Group Holding Limited (NYSE: BABA). Fisher allocated $2.25 billion to Alibaba Group Holding Limited at the end of September. That's 30% less than Fisher's Apple allocation. Fisher's sixth largest stock position is Alphabet Inc. (NASDAQ: GOOGL) with a position size of $1.8 billion. Alphabet's market cap was slightly behind Amazon.com Inc's at the end of September, yet Fisher give Amazon a 70% higher weight than Alphabet.

The most interesting observation we have is that Fisher's Facebook position was only $74 million. Facebook, Microsoft, Amazon, Alphabet, and Alibaba are some of the most popular stocks among hedge funds. Even Visa is a top 10 hedge fund stock. Our calculations showed that  top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. We noticed that several of Ken Fisher’s top stock picks are among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). However, some of the popular hedge fund stocks were missing or underweighted. For example, Facebook returned more than 50% this year and Ken Fisher was significantly underweight the stock.

5 Most Popular Stocks Among Hedge Funds

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Fisher Investments isn't a closet index fund. The biggest 5 stock positions in his 13F portfolio, namely Visa, Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN), and Microsoft Corp (NASDAQ:MSFT), and Alibaba (BABA) account for 16% of his performance. This is similar to the weight of top 5 stocks in the S&P 500 Index. The difference is Fisher overweights stocks like Visa and Alibaba, and underweights Facebook and Berkshire Hathaway. Basically it is sort of an "enhanced" index fund, but we don't really know much about its returns. We don't think Fisher can ever outperform or underperform the market by double digits. It is our opinion that he is a billionaire not because he is a legendary investor but because he is a marketing genius.

Disclosure: No positions. This article is originally published at Insider Monkey. This article is updated on December 11, 2019 to include Ken Fisher's publicist's comments about the words that got Ken Fisher into a PR nightmare.

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