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Investing Specialists

Our Ultimate Stock-Pickers' Top 10 Buys and Sells

We're seeing more new money purchases and outright sales from our top managers.

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By Greggory Warren, CFA | Senior Stock Analyst

Despite all of the turmoil in the Middle East, and the spate of natural (and not-so-natural disasters) in the Asia-Pacific region, during the first quarter of 2011, the S&P 500 Index still rose 6%, and increased another 3% in April of this year. We also saw some of the strongest inflows into U.S. stock funds during the first quarter, with more than $25 billion flowing into these funds, which was the highest level of inflows into U.S. stock funds since the first quarter of 2006. International stock funds also saw a decent level of inflows during the period, with close to $15 billion flowing into them. The positive flow trends continued through April, with more than $2 billion flowing into U.S. stock funds, and close to $3 billion going towards international stock funds. It was against this backdrop that our Ultimate Stock-Pickers were reviewing their portfolios, and making purchases or sales that they felt would prepare them for the next move in the markets.

Much as we have seen over the last year, our top managers felt more comfortable putting money to work in names they already know during the most recent period as opposed to making a lot of new-money purchases. This was something we noted a few weeks ago when we did an early read on the buying activity of our Ultimate Stock-Pickers, observing that much of the buying activity in the first quarter was focused on additions to existing positions rather than purchases of new names. We continue to believe that the ongoing rally in the equity markets, as well as the uncertainty that prevails over the timing and strength of the economic recovery, have made it increasingly more difficult for our managers to move out of their comfort zones. That said, it was interesting to note (once all of the data was collected) that eight of the ten top purchases that were made by our Ultimate Stock-Pickers during the most recent period had one or more manager actually putting new money to work in the name.

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.