From the report:
“There are two major reasons for the potential pullback. First, the reversal of ‘window dressing.’ That is, investment managers may hold stocks with the biggest gains until year-end year to indicate that the fund participated in the biggest winners of the year. Second, investment managers may wait until January to exit best performing stocks to avoid short-term capital gains.”
Here are the stocks that make up the list and the price when the call was made:
The list above reflects the personal views of Savita Subramanian from Merrill Lynch.
Merrill Lynch Methodology
Our understanding of Merrill Lynch methodology was to screen stocks in the S&P 1500 by the following criteria:
Outperformance in 2006: performed at least twice as well as its respective S&P 1500 sector between 12/31/2005 and 12/18/2006. Fundamental Outlook: NEUTRAL or SELL rated by Merrill Lynch Fundamental Research, where ML fundamental analyst’s outlook does not appear to offset a potential seasonal sell-off.
Disclosure: Author has no position in the above-mentioned stocks.