State Street's Top Holdings: A Brief Analysis

Mar.28.11 | About: State Street (STT)

State Street Corporation (NYSE:STT) is one of the oldest U.S.-based financial services company. Established in 1792, State Street is a truly global institution with $21.527 trillion in assets under custody and administration and $2.01 trillion in assets under management. The company took a substantial hit in the financial crises, but was able to recover and get back on its feet. Last year, net profit was $1,540 billion. According to Zacks Research, this year earnings are expected to grow by 15%, and five-year EPS growth estimate is 10.7%. The investment titan just announced a quarterly dividend of $0.18 per share and authorized a stock buy-back program of up to $675 million. Based on the latest filings submitted to I-Metrix Edgar-Online, top holdings in State Street's portfolio are as follows:

Company Name

Ticker

Sector

Current Value

YTD Return

Profit / Loss

EXXON

XOM

Energy

16.42

14.96%

2.136

APPLE

AAPL

Technology

11.47

8.98%

0.945

CHEVRON

CVX

Energy

10.90

17.90%

1.655

IBM

IBM

Technology

10.28

10.95%

1.015

CATERPILLAR

CAT

Industrial G.

8.21

17.02%

1.195

JOHNSON & JOHNSON

JNJ

Healthcare

8.16

-3.78%

-0.321

UNITED TECH.

UTX

Conglomerates

7.80

6.63%

0.485

GENERAL ELECTRIC

GE

Conglomerates

7.71

8.76%

0.621

MICROSOFT

MSFT

Technology

7.30

-7.68%

-0.607

JPMORGAN CHASE

JPM

Financial

7.28

8.24%

0.554

PROCTER & GAMBLE

PG

Consumer G.

6.76

-4.67%

-0.331

AT&T

T

Technology

6.36

-0.38%

-0.024

WELLS FARGO

WFC

Financial

6.25

3.23%

0.196

BANK OF AMERICA

BAC

Financial

6.17

0.08%

0.005

PFIZER

PFE

Healthcare

6.02

17.43%

0.893

LOCKHEED MARTIN

LMT

Industrial G.

5.99

16.04%

0.829

BERKSHIRE

BRK.B

Financial

5.65

6.40%

0.340

COCA-COLA

KO

Consumer G.

5.54

-0.12%

-0.007

GOOGLE

GOOG

Technology

5.21

-2.40%

-0.128

3M

MMM

Industrial G.

4.90

7.57%

0.345

CITIGROUP

C

Financial

4.88

-5.71%

-0.296

PHILIP MORRIS

PM

Consumer G.

4.85

12.41%

0.535

SCHLUMBERGER

SLB

Energy

4.77

4.35%

0.199

HEWLETT PACKARD

HPQ

Technology

4.75

1.21%

0.057

CONOCOPHILLIPS

COP

Energy

4.60

18.87%

0.730

HONEYWELL

HON

Industrial G.

4.56

8.59%

0.361

ORACLE

ORCL

Technology

4.53

4.45%

0.193

MORGAN STANLEY

MS

Financial

4.52

-0.11%

-0.005

INTEL

INTC

Technology

4.23

-2.30%

-0.100

WAL MART

WMT

Services

4.17

-2.24%

-0.096

TOTAL / AVERAGE

200.23

5.49%

11.374

Value Weighted

5.68%

Click to enlarge

State Street's equity portfolio has substantial differences with other U.S.-based investment banks. JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS), and Morgan Stanley (NYSE:MS) hold SPY as one of their largest holdings. However, State Street's top equity holdings concentrate on energy, technology and industrial goods. Since January, State Street's energy holdings soared by 12.8%, which means $4.72 billion in profits. Industrial producers also gained 11.53%, boosting the portfolio's return by $2.73 billion.

The year-to-date performance of State Street's top holdings is much better than that of Morgan Stanley. The value-weighted average yield of the portfolio is 5.68%. State Street's portfolio managers were able to beat S&P 500 return (4.41%) by more than 1%. The sectoral breakdown of the top holdings can be visualized as such:

[Click all to enlarge]
State Street Sectoral BreakdownClick to enlarge

State Street's investment managers prefer to invest in Technology stocks, followed by Energy, and Financial holdings. Apple is the largest technology holding, followed by IBM. Since January, Apple and IBM shares increased by 8.98% and 10.95%. These two stocks returned $0.945 billion and $1.015 billion, respectively.

The best performer in the portfolio was Pfizer, whose shares gained a stunning 17.43% in 2011. Pfizer holdings rewarded State Street's portfolio with an extra capital gain of $0.893 billion. The following graph shows the year-to-date profit/loss performance:

Click to enlarge

So far, its Energy stocks have performed the best, followed by the Industrial holdings. Exxon (14.96%), Chevron (17.90%), and Schlumberger (4.35%) offered fantastic capital gains in the amount of $2.14 billion, $1.66 billion, and $0.20 billion, respectively. State Street also was stubbornly bullish about Industrial producers: Caterpillar and Lockheed Martin are the top industrial holdings, which returned 17.02% and 16.04%, respectively.

The sectoral performance analysis of State Street's portfolio shows that investors are bullish on both energy stocks and industrial producers. That might be a healthy sign; finally, we are getting completely out of recession, which devastated our economy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.