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Investing Specialists

The Ultimate Stock-Pickers' Top Purchases and Sales

We're sorting through the transactions of top managers to find higher-conviction opportunities.

By Greggory Warren, CFA | Stock Analyst

The fourth quarter of 2008 and the first couple of months of this year posed a significant challenge to most investors--including the top managers we monitor at Ultimate Stock-Pickers. While the market (as represented by the S&P 500 Index (SPX)) was already down some 20% during the first three quarters of 2008, it did little to prepare investors for the carnage that was about to come. With the credit markets in complete disarray, following the collapse of Lehman Brothers,  AIG (AIG), and a host of other financial bellwethers, and concerns growing about global economic growth, equities went into a broad-based decline in October and November, with the index losing another 25% of its value. While the market did settle down some in December, it was not enough to overturn the nearly 40% decline the S&P 500 since the beginning of the year. And, unfortunately, things did not improve much during the first few months of 2009, with the market declining another 20% in value.

Against this backdrop, our top managers were not just sitting idly by. Many were actively buying and selling securities, either adding to (or subtracting from) existing positions or taking advantage of the market weakness to build positions in new names. With the Ultimate Stock-Pickers' concept, we're looking to uncover the level of conviction these managers had in the securities they were buying and selling. We do this in a two step process that first assesses the relative attractiveness of individual securities by noting how many funds actually hold it and whether or not they've been adding to (or subtracting from) their position. We also look at the percentage that each individual security makes up of the equity portfolios of the managers on our list, determining the level of conviction the managers have in a particular name by the amount they have committed to it.