Billionaire Ken Fisher and Corporate Insiders Are Betting On These Stocks
In this piece, we will take a look at the stocks that Ken Fisher and corporate insiders are betting on. If you want to skip our introduction to insider trading and Mr. Fisher then skip to Ken Fisher's and Insiders' 5 Stock Picks.
Insider trading is often thought to be illegal. The most commonly understood definition of insider trading, and one that is also against the law, is trading the shares of a firm based on non publicly available information. As an example, if your uncle worked at Tesla, Inc. (NASDAQ:TSLA), and he told you that during its upcoming earnings call the firm will announce a shut down of U.S. manufacturing, and you used this information to buy Put options before the earnings to profit from a drop in the share price, then this would be insider trading. Depending on the scale of your trade, the SEC might fine you and your uncle or even send you to jail.
However, another variety of insider trading is legal. This involves the purchasing or selling of a firm's shares by its management or large investors, and the transactions are reported on a publicly traded firm's SEC page and the purchases are often evaluated by investors to gauge what these people, which generally have a deeper insight into the firm's operations, are thinking about their company. At the same time, management, and particularly top level executives such as chief executive officers also buy shares to project their confidence in their firm's prospects to potentially assuage any large investor concerns that might be present.
The lucrative nature of the stock market and the potential it offers to make millions means that even though insider trading is illegal, it will most likely never go away. It continues to generate headlines in the media, and recently, one of the biggest cryptocurrency trading companies in the world is finding itself on its web. This firm is none other than the embattled cryptocurrency trading platform Binance, whose chief executive officer Changpeng Zhao has stopped all Binance employees from engaging in any form of futures trading. Additionally, the company has a new policy in place that now require employees from holding their investments for at least 90 days, which is aimed to stop them from profiteering in the short term on the basis of information that might be unavailable to the broader public.
At the same time, while Binance might not be facing any legal action against insider trading, one publicly traded firm that is facing an insider trading lawsuit is Chegg, Inc. (NYSE:CHGG). The growth in online learning after the coronavirus pandemic has boosted the demand for such platforms, and at the same time, it has also allowed unscrupulous students to cheat on their tests or use other unfair advantages to distort their academic results. This has landed the CEO of San Francisco 49ers Mr. Jed York at the center of a lawsuit against Chegg which claims that not only did the company profit from college students using it to cheat on their exams, but that Mr. York and other directors sold stock while the shares were at their peak without informing investors about the scale of the fraud that was being conducted through Chegg. The company's shares were trading at $113 in February 2021 when online education was at its peak but then lost their luster as in person classes resumed. Mr. York is accused of making a cool $1.4 million from inflated share prices, and for its part, Chegg has denied any wrongdoing as it claims that it is "vigorously defending itself" from the allegations.
While insider purchases provide one way to determine if a stock might appreciate in the future, another popular method of sifting through the thousands of companies on the stock market is by taking a look at what hedge funds are doing. After all, these are professionals who spend most of their day pouring over anything and everything related to the stock market, so their decision carry a lot of weight as well. One of the most successful hedge fund investors of all time is the billionaire founder of Fisher Investments Mr. Ken Fisher. Having spent decades on the stock market, Mr. Fisher is one of the richest people in the world, and he often has remarkable insights into the market that are based purely on the key determinants of market health such as inflation, interest rates, and economic growth instead of the chatter that often clouds the truth behind what can take place in the future. He was one of the few investors that was actually bullish last year, and we all know how that played out as markets stunned everyone in 2023 to produce double digit returns. So naturally, his words have a lot of weight to them, and as to what he thinks will happen in the future, here's a glimpse inside his mind about the rest of the year:
Let me just say that all these sentiment features lead to pessimism. And as a bull market begins, there's this feature that I've talked about before that I call the Pessimism of Disbelief, which is the tendency of people to get more pessimistic as the market starts to go up. Where maybe we had a bottom in June, the middle of June, on June 14. Maybe we had a bottom, depending on how you measure it, which indexes you look at in July, the stocks are higher either way. And when you think about these things, it is normal. I'm not saying those were the bottom. I don't really know.
But it is normal when you have a bear market make a bottom and start to go up for people to keep getting more pessimistic as it goes up. The pessimism leads to future positive surprise which becomes doubly bullish fully buoying the bull market.
And you should view today's sentiment as the precursor to higher prices ahead without any precise timing of whether we've had the bottom, the bottom still a little bit ahead. What's going on? That negative sentiment is not consistent with a world that's about to fall apart. It's more consistent with a world that's already seen its stock market bottom and is starting to rise and the Pessimism of Disbelief builds.
So, you get yes buts to all positivity, all new things that come along better than people feared as people keep looking for the bad that looking for the bad is a good. And you should view sentiment in that way because negative sentiment is one of the most bullish features you can get.
So, we decided to take a look at some stocks that are both the top picks of Ken Fisher and have seen insider activity lately. The top picks are The Home Depot, Inc. (NYSE:HD), Amazon.com, Inc. (NASDAQ:AMZN), and Adobe Inc. (NASDAQ:ADBE).
Ken Fisher of Fisher Asset Management
Our Methodology
To compile our list of stocks that both Ken Fisher and insiders love, we use his second quarter of 2023 portfolio and scanned them for insider purchases through Insider Monkey's screener. The ten stocks which were the largest Ken Fisher investments in Q2 2023 with insider buying are listed below.
Billionaire Ken Fisher and Corporate Insiders Are Betting On These Stocks
10. Union Pacific Corporation (NYSE:UNP)
Fisher Investments' Q2 2023 Stake: $1.1 billion
Union Pacific Corporation (NYSE:UNP) is a railroad company headquartered in Omaha, Nebraska. An economic slowdown coupled with inflation led the firm to miss its analyst EPS estimates for the second quarter, and the firm's shares are rated Buy on average. Its director Teresa Finley bought $259,799 worth of shares in October 2022.
Mr. Fisher's investment firm had owned 5.6 million Union Pacific Corporation (NYSE:UNP) shares that were worth $1.1 billion as of Q2 2023. Including the hedge fund, 84 of the 910 hedge funds part of Insider Monkey's database had bought a stake in the company. Eric W. Mandelblatt's Union Pacific Corp is Union Pacific Corporation (NYSE:UNP) largest hedge fund shareholder since it owns a $1.6 billion stake.
Amazon.com, Inc. (NASDAQ:AMZN), The Home Depot, Inc. (NYSE:HD), and Adobe Inc. (NASDAQ:ADBE) are met by Union Pacific Corporation (NYSE:UNP) in our list of stocks favored by both Ken Fisher and corporate insiders.
9. JPMorgan Chase & Co. (NYSE:JPM)
Fisher Investments' Q2 2023 Stake: $1.3 billion
JPMorgan Chase & Co. (NYSE:JPM) is the largest private bank in the world. The bank is involved in a high profile scandal these days, as it stresses that it would not have dealt with the disgraced financier Jeffrey Epstein had it known about his sex trafficking crimes. The latest insider stock purchase for JPMorgan Chase & Co. (NYSE:JPM) took place in January when its head of digital platforms Mr. David Hudson bought 375 shares for $50,447.
As of June 2023 end, 106 out of the 910 hedge funds profiled by Insider Monkey had held a stake in the bank. JPMorgan Chase & Co. (NYSE:JPM)'s largest hedge fund investor among these is Fisher Investments through a $1.3 billion investment.
8. Walmart Inc. (NYSE:WMT)
Fisher Investments' Q2 2023 Stake: $1.39 billion
Walmart Inc. (NYSE:WMT) is the largest brick and mortar retailer in the world. Its highly anticipated second quarter earnings saw the firm beat analyst EPS estimates as consumers shifted to a low cost buying habit in the midst of record high inflation. Its director Randall Stephenson bought a whopping $1 million of shares in March 2023.
By the end of this year's second quarter, 81 out of the 910 hedge fund portfolios studied by Insider Monkey had held Walmart Inc. (NYSE:WMT)'s shares. Out of these, the retailer's largest shareholder is Mr. Fisher's investment firm since it owns 8.8 million shares that are worth $1.39 billion.
7. Merck & Co., Inc. (NYSE:MRK)
Fisher Investments' Q2 2023 Stake: $1.46 billion
Merck & Co., Inc. (NYSE:MRK) is a pharmaceutical company headquartered in Rahway, New Jersey. Its chief of international health Mr. Joseph Romanelli has made eight stock purchases between December 2022 and April 2023 which are roughly worth $42,000.
Ken Fisher's Fisher Investments had owned a $1.46 billion stake in the healthcare company during 2023's June quarter, making it the biggest hedge fund investor. Including Fisher Investments, 78 out of the 910 hedge funds part of Insider Monkey's research have also invested in the company.
6. Caterpillar Inc. (NYSE:CAT)
Fisher Investments' Q2 2023 Stake: $1.9 billion
Caterpillar Inc. (NYSE:CAT) is an industrial machinery manufacturer. One of Wall Street's most well known investors Jim Chanos has bought nearly a million dollars of Put options in the company's stock. These are short positions, so the shares might be worth looking out for in the future. Additionally, director David MacLennan bought $99,716 in shares in February 2023.
50 out of the 910 hedge funds part of Insider Monkey's Q2 2023 database had held a stake in Caterpillar Inc. (NYSE:CAT). The firm's largest stakeholder out of these is Ken Fisher's hedge fund since it has a $1.9 billion stake.
The Home Depot, Inc. (NYSE:HD), Caterpillar Inc. (NYSE:CAT), Amazon.com, Inc. (NASDAQ:AMZN), and Adobe Inc. (NASDAQ:ADBE) are some top stocks bought by both insiders and billionaire Ken Fisher.
Click to continue reading and see Ken Fisher's and Insiders' Top 5 Stocks.
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Disclosure: None. Billionaire Ken Fisher and Corporate Insiders Are Betting On These Stocks is originally published on Insider Monkey.