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Investing Specialists

Our Ultimate Stock-Pickers' Top 10 Buys and Sells

The runup in the markets during the first quarter increased the importance of good old-fashioned stock picking for our top managers; new-money buys help populate top purchases.

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By Greggory Warren, CFA | Senior Stock Analyst

After retreating to near-bear-market levels during the third quarter of last year, U.S. stock markets (as exemplified by the S&P 500 Index) rebounded strongly from October 2011 through to the end of March this year, with the double-digit return generated by the S&P 500 during the first quarter of 2012 being the strongest first-quarter showing for the benchmark index in over a decade. Even so, investors continued to shun actively managed U.S. stock funds, pulling close to $25 billion from these funds during the first quarter (on top of the $45 billion that they pulled out during both the third and fourth quarters of last year). This left many managers in the mutual fund industry, including some of our Ultimate Stock-Pickers, facing the prospect of a heightened degree of investor redemptions even as the markets continued to lift the values of their portfolios during the first quarter. We expect that the downturn in the markets since the end of March has only added to the desire of many managers to keep additional cash on hand to meet investor redemptions. It was against this backdrop that our top managers made their portfolio decisions during the first quarter (and early part of the second quarter), with much of the data indicative of managers that continue to be engaged in good old-fashioned stock picking.

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