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Investing Specialists

Top 10 Buys and Sells by Our Ultimate Stock Pickers

The drop in the markets has created buying opportunities for our top managers.

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By Greggory Warren, CFA | Senior Stock Analyst

The second quarter saw the return of increased volatility to the global equity markets, as concerns over the European credit crisis and its potential impact on the global economic recovery had investors moving away from riskier asset classes. It was against this backdrop that our Ultimate Stock-Pickers were reviewing their portfolios, making purchases or sales that would prepare them for the next stage of the market. Unlike the first quarter of the year, when our top managers were imbued with a sense of cautious optimism (and there was even a growing belief that improvements in corporate profits and balance sheets would hold up in the near term), the second quarter saw a more reserved attitude about the markets and the economy.

As we were sifting through the holdings, purchases, and sales of our Ultimate Stock-Pickers, we were intrigued by the dichotomy that continues to exist among our top managers. Many have been taking measured steps to invest in companies that have relatively stable revenue, sound balance sheets, and increasing cash balances that can be used for debt repayment, dividends, or share repurchases. Meanwhile, others continue to focus on more cyclically sensitive firms that may have room to run even after their spectacular rise during the market rally over the last year and a half. Even with the dip in the markets since the end of the first quarter, indices like the S&P 500 Index (SPX) are still up more than 50% since the markets bottomed in early March 2009. What the drop in the markets has done is create buying opportunities for our top managers.

The Morningstar Ultimate Stock-Pickers Team does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.