By Nico Gayle
Goldman Sachs (GS) is one of the largest investment firms on Wall Street, and has a footprint throughout the financial universe. In a two-part series, we decided to take a look at Goldman’s 39 equity mutual funds, and how much they increased and decreased positions in their top 30 holdings. While there seems to be a mostly mixed bag within industries, we found a big merger arbitrage play, a shift in geographic focus, and increased stakes in beverage companies. Here are stocks 1-15:
Spdr S&P 500 (SPY): Goldman increased their holdings of SPY, which attempts to track the S&P 500, by 7.36%. SPY accounts for 3.80% of the Goldman portfolio.
Microsoft (MSFT): Goldman funds increased holdings of Microsoft by 3.2%. MSFT has a market cap of $208.21B, and offers a $0.64 (2.50%) dividend. The stock currently trades at a P/E of 10.58. Microsoft is a relatively safe and mature company, but is also working hard to expand its business. They recently released Internet Explorer 9 and have entered into a partnership with Nokia (NOK) in an attempt to build their mobile phone software business. On the other hand, the company has killed production on its Zune music player, in what appears to be a defeat to the iPod.
Apple (AAPL): Holdings of Apple increased by 21.87%. The tech giant has a market cap of $308.30B, and is trading at a P/E of 18.67. The company recently released the iPad 2, but may face production delays due to the tsunami in Japan. Apple continues to be a market leader, constantly releasing innovative products to fuel growth. It has a strong hold on several markets with products like the iPad, iPod, and to a lesser extent the iPhone. However, it is sure to face plenty of competition in these markets with new products being released by all the big tech players.
Dollar General (DG): Currently trading at a 20.80 P/E ratio, Goldman reduced their holdings of DG by 10.39%. Dollar General has a market cap of $10.15B, and is coming off a record year where it showed strong growth. The discount retail sector has also had lots of M&A activity lately, which could affect Dollar General and its competition.
PepsiCo (PEP): Goldman funds increased their stakes in the beverage maker by 8.51%. At a P/E of 16.11, the stock has a market cap of $100.08B and offers a $1.92 (3.00%) dividend. The company could be adversely affected by rising food prices, and may have to pass these costs on to consumers.
Ishares Russell 2000 (IWM): IWM, which is intended to mimic the Russell 2000, accounts for just over 1% of Goldman’s holdings, but holdings were reduced by 29.36%.
Schlumberger (SLB): Holdings of Schlumberger were increased by 15.18%. The oil services company has a market cap of $117.47B, offers a dividend yield of 1.20%, and is currently at a 25.75 P/E multiple. With rising oil prices, business could pick up for SLB. Additionally, the company should benefit from the re-opening of drilling in the Gulf of Mexico, as the government appears to be issuing permits at a faster rate.
JPMorgan Chase (JPM): Goldman made a small 2.84% reduction in its holdings of JPM. The stock is trading at a price/book ratio of 1.02 and offers a $0.20 (0.40%) dividend. JP Morgan has a market cap of $174.19B. The company announced plans to open its sixth branch in China in an effort to expand in the emerging economy, and their investment banking unit has performed well this year, leading the league tables for the first quarter of 2011.
Genzyme (GENZ): The biggest changer of the group, holdings of Genzyme increased by 1946.1%. Goldman is most likely engaging in merger arbitrage with the move, betting on the $20B merger between Genzyme and Sanofi-Aventis. The deal offers $74 a share for Genzyme shares, plus up to an additional $14 per share depending on the company’s performance. Interestingly, Goldman’s investment banking unit is listed as one of two financial advisors to Genzyme on the deal. Genzyme is currently trading at a P/E of 48.19.
Qualcomm (QCOM): Wireless telecommunications company Qualcomm has a market cap of $86B, and yields a dividend of 1.40%. The stock is trading at a 24.11 P/E ratio. Goldman increased its holdings of the stock by 13.50%. The company should benefit from increased sales of smartphones. It is also in a new partnership with Apple, providing parts for the Verizon (VZ) iPhone 4 and the iPad 2.
Ishares MSCI EAFE Index (EFA): EFA is meant to track the MSCI EAFE, which includes stocks from Europe, Australasia, and the Far East. Goldman was very bearish on it, reducing their holdings by 47.03%. Japan is currently dealing with the destruction of its economy from the tsunami, and Europe is dealing with sovereign debt problems, casting shadows over both regions’ stocks.
General Electric (GE): Goldman has been bullish on this stock, increasing holdings by 24.50%. GE has a market cap of $204.09B and a P/E ratio of 18.10. The stock also offers a dividend of $0.50 (2.80%). GE is one of the most diversified companies around, with operations all over the world in many different fields, including finance, technology, energy and more. Despite billions in profits, the company managed to pay zero US corporate taxes the last two years.
Ishares MSCI Emerging Markets Index (EEM): Contrary to the decrease in their EAFE index holdings, Goldman increased their holdings of EEM by 16.55%. Emerging markets continue to be a hot area, with many corporations betting on emerging markets to fuel company growth.
Oracle (ORCL): Goldman positions in Oracle declined by 9.64%. Oracle has a market cap of $154.35B, and offers a small dividend yield of .60%. ORCL is trading at a 24.54 P/E multiple. The company’s shares have risen after announcing better than expected quarterly results and issuing high expectations for the future.
Google (GOOG): Holdings in Google have remained fairly steady, with a slight 2.88% increase. Trading at a P/E of 21.34, Google has a market cap of $180.49B. The company has quickly become one of the leaders in the tech industry, constantly expanding through innovative new products, with the Android phones being among the most recent to catch on. The company has been in a long battle with the Chinese government over censorship, a battle that will be difficult to win. However, China offers a huge market and any success there could be very beneficial to Google’s bottom line.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.