Conflicting Moves Among the Ultimate Stock-Pickers
Some managers were buying securities that others were selling during the most recent period.
By Drew Woodbury | Associate Stock Analyst
As we noted in one of our articles last week, 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. 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. One of the stranger dynamics of the period, though, was that some managers were actually buying securities that others were actively selling.
Within our roster of 25 top managers are what we consider to be some of the smartest and savviest investors out there. Despite having many things in common--like a strong track record of performance, a dedication to fundamental research, and a commitment to their investment strategies, not all of these managers think alike. One of the interesting things about markets is that conflicting opinions and perspectives rise to the surface every day. For two parties to consummate a stock transaction there must be two conflicting points of view: one that generates a buy decision and one that leads an investor to sell. The buyer thinks the price is going to go up, while the seller believes the price is going to decline. While this statement is perhaps a bit too simple--with factors like portfolio considerations, risk management, and/or liquidity needs offering up alternate reasons for stock transactions--it is more often than not the simplest reason.
The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.