Even while under the pressure of managing $44 billion in assets, billionaire Ken Fisher of Fisher Asset Management still manages to throw us little guys a bone every now and again.
Unlike many of his peers in the hedge fund community, Fisher has a history of filing his Form 13Fs to the SEC earlier than required, typically 20 days or more in advance of the due date.
Why is this a big deal? His early reporting increases the transparency and usefulness of his disclosure, helping investors to better interpret the filing without being too many steps behind.
This quarter was no exception, with Fisher Asset Management releasing its second-quarter 13F just 25 days after the quarter ended (versus the maximum 45 days allowed by law). With this information as ripe as its going to get, I’ve picked apart Fisher’s positions to see where he's finding high yields.
A broader interpretation of his 13F filing shows that Fisher is still bullish on finance and banking, with a special focus on REITs (real estate investment trusts) for attractive yields. Here are four of his most lucrative dividend picks.
Senior Housing Properties Trust (NYSE: SNH) is one of the largest income producers in Fisher’s portfolio, offering the billionaire a 6.4% yield. The owner and operator of nursing homes, retirement communities, and assisted living complexes only amounts to about $11 million in his portfolio, however. Perhaps that is for the best, as the stock has lost nearly 12% looking back a year (versus the S&P 500 Index’s 17% gain). Wall Street isn’t currently a fan of health care REITs it seems, with Goldman Sachs downgrading the sector earlier this month and average analyst price targets for SNH coming in slightly below current trading levels.
Dupont Fabros Technology (NYSE: DFT) doesn’t carry a name that screams “office REIT,” but trust that the company does in fact operate and manage wholesale data centers under the real estate investment trust status. Fisher is earning a 5.3% yield on DFT, as are noteworthy investment firms like Blackrock and Fidelity. Fisher’s allotment to DFT totals around nearly four times that of SNH, or roughly $41 million. The company recently beat earnings on July 24, helping fuel the stock's 13% rise this year.
BioMed Realty Trust (NYSE: BMR) is the top provider of laboratory and office space for the life science industry, operating in the main U.S. research hubs (think Boston, San Francisco, and so on), as well as adjacent to many universities. Its REIT tax structure helps to bestow investors with a respectable 4.5% yield, prompting Fisher Asset Management to allocate nearly $43 million to the stock. BMR is currently trading about 5% under from analyst’s price targets. It is also 3% from its 52-week high, and I wouldn’t be surprised if we saw some upward revisions of those targets if it appreciates further. Continuing to lease more space to big players like Bristol-Myers (NYSE: BMY) (as BMR did late July) should support that growth.
National Retail Properties (NYSE: NNN) possesses the lowest yield on this screen, a still-ample 4.4%. Fisher currently holds about $42 million worth of NNN, meaning he's holding similar stakes in DFT, BMR and NNN. The owner of freestanding retail stores has a strong record with income investors, escalating its annual dividends for 24 years in a row. NNN also stands out from the pack in that it has posted a gain of 20% this year. That ramp up most likely explains the rash of downgrades NNN received this summer from Merrill Lynch, Morgan Stanley and Ladenburg Thalmann, hinting that the REIT will be entering a cool-off phase soon (if it has not already).
Risks to Consider: There are obvious drawbacks for tracking and investing based upon 13F disclosures, even when the lag between investment and form submission is as small as Fisher's. Because we can't see Fisher's entire portfolio, hedging mechanisms, real assets, and so on, investors should view Fisher’s declared positions in an educational light rather than as investing gospel.
Action to Take --> Now worth $2.5 billion, Fisher is a forced to be reckoned with in the investing community. While every one of his portfolio picks may not be suitable for every investor, digging through his portfolio while looking for income-friendly stocks like these could reveal some excellent opportunities that might not have been on your radar.
P.S. -- America's wealthiest investors have long used REITs to generate safe, rising income. In our latest High-Yield Investing research, we've found another little-known group of investments the wealthy have used for decades to generate dividend yields of 12% or more. To learn more about these special investments, go here.