In Brief
A growth screen based on the work of Philip Fisher. Fisher was one of the investment community’s most revered growth investors, with a 74 year career that saw him not only deliver strong returns for his clients but also influence some of the greatest investing minds in the world, including Warren Buffett.
Background
Fisher was born in the US in 1907 and died in 2004. His hugely popular book Common Stocks and Uncommon Profits was first published in 1958 and helped to cement his reputation as a hugely influential investor. Central to his philosophy of buying stocks was a search for companies with strong management teams and equally strong growth prospects. Fisher started his own investment management firm in 1931 (now Fisher Investments) and did not retire until the age of 91.
The firm is now headed by his son, the highly regarded value investor, Ken Fisher, whose stock picking strategy is also tracked by Stockopedia. Among Philip Fisher’s most famous admirers is the world’s most successful investor Warren Buffet, who once claimed he was ‘85% [Benjamin] Graham and 15% Fisher’.
Investment Strategy
In the 1929 stockmarket crash, Fisher lost money on his investments after buying stocks that looked cheap on a price/earnings basis. He went on to rely less on the P/E as a measure of value and focused more closely on growth factors. His own preference was for manufacturing companies, a sector he understood, and he advised against diversifying too much, with a limit of 20 stocks in a portfolio. Rather than looking for undervalued stocks, Fisher would seek out much higher returns from those companies that he believed could outperform the market in terms of growth in sales and profits over the long term. He was particularly interested in firms that had a competitive advantage as a means of delivering consistent sales growth.
Naturally he was wary of stocks that pay dividends, preferring cash to be recycled in order to fund growth. His attention to the integrity of management was a major factor in this respect because he had to be sure that excess cash would not be wasted on poor decisions and needless empire building by profligate executives.
In Common Stocks and Uncommon Profits Fisher lifted the lid on his blend of quant and qualitative analysis of stocks. In the preface to…
