A recent interview link featuring the notoriously reclusive Phil Fisher was posted today by Ian Cassel, a fairly notorious investor in his own right. The link is to an October 1987 Forbes article where Phil Fisher made one of his only public appearances which I will also link below.
It discusses Phil Fisher’s strategy in some detail. One interesting aspect is that he would have a very few core positions, ones that he would load up on, and he would also have positions in companies that he is thinking about making core positions. He invested 65-68% in just four stocks of which he unmasks only two–Raychem and Motorola. He also stated he had about 20-25% cash and the balance was held in the potential investment category. This is a high level of concentration by most people’s standards but is in line with Charlie Munger, Warren Buffett and Joel Greenblatt to name a few.
Cash and investment ideas
The amount of cash in a portfolio is usually inversely related to the amount of investment ideas one has. Fisher had a large portion of his portfolio in cash mainly because of not being able to find good investments but also because of well founded macroeconomic concerns (did I mention that this article was dated October 19th, 1987???).
“I haven’t the faintest idea whether we are in 1927 or 1929. Some awfully bright, able, sound people were scared as hell in 1927. But the thing rolled on for two more years, and that may happen here. I don’t know.”
Date her before you marry her
Another interesting aspect is the tracker positions in several companies that he is thinking about making core positions. This is another somewhat unheard of investment approach. He wants to own and track these positions for a while before piling in.
Moat? What Moat?
When discussing one of his major investments, Motorola, to which he made several times his initial investment, he clarified the stock’s merits. All of his core investments were companies that were low-cost producers. They were also all number 1 in their fields. He later made the specific remark that Motorola’s chairman was an honest man who had significant farsightedness.
Fisher, interestingly, states he is waiting for some positions to pull back or for some issues to be less favored by the market. This is somewhat of a departure from what most people think of his investment style where he will by at any given price. It is fairly obvious that he is somewhat more price conscious than his book lets on.
An interest quote relating to being contrarian is as follows:
“Part of real success is not being a 100% contrarian. When people saw that the automobile was going to obsolete the old streetcar system in the cities, some decided that since nobody would want streetcar stocks, they’d buy them. That is ridiculous. But being able to tell the fallacy in an accepted way of doing things, that’s one of the elements in the investment business of big success.”
Graham vs. Fisher II
Fisher addresses the differences in the Graham and Fisher. Fisher states that Grahams approach was to find things so cheap that it would be extremely difficult to lose money. Fisher states that his approach is better because one can make substantially more money per dollar invested in his approach. He also hits at the idea of Graham’s style being so formulaic that the returns will likely be competed away.
Safety Advantages of Growth Stocks
During historical times of distress in a nation’s history such as war, hyperinflation or depression some of the best run companies still made decent head ways. Fisher states that many of the great companies of France and Germany during early to mid parts of the last century lost significantly less value than lesser competitors. During the great recession some of the major companies of today’s market continued to perform well (not in stock price but in a fundamental sense) and bounced back appreciable faster than the typical issue.
Link to Article Below: