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BlackRock Financial Management, Inc. is an investment advisory and hedge fund firm founded by Robert S. Kapito. The firm caters to high net-worth individuals, banking or thrift institutions, pension and profit sharing plans, charitable organizations and corporations and manages over $150 billion in assets.

The following is a list of its top 15 buys in the last quarter, as released in BlackRock's most recent 13F filing with the SEC.



Shares Held - 12/31/2010

Shares Held - 03/31/2011

Pfizer Inc.




The Goldman Sachs Group Inc.




American International Group Inc.




Texas Instruments Inc.




Philip Morris International Inc.




Alcoa Inc.




Walter Energy Inc.




Eaton Corporation




Medtronic Inc.




FirstEnergy Corp.




Microsoft Corporation




Citigroup Inc.




Tesoro Corporation




Ameriprise Financial Inc.




Dell Inc.




Here is my take on Blackrock's top five buys by market value:

Pfizer Incorporated is a global pharmaceutical company, ranking number one in sales in the world. The company is based in New York City, with its research headquarters in Groton, Connecticut. Pfizer has the #1 market position in cardiovascular, #2 in infectious disease and central nervous system treatments, and is #4 in vaccines globally. It is the market leader in the U.S. (12% share), Europe (10%), Asia (7%), Japan (6%) and Latin America (6%).

My Take: Buy

Management expects net income to grow 5% from 2010 to 2012, partly due to $4-$5 billion in cost reductions and revenue contributions from new products. According to management, Pfizer "remains on track" to achieve 15 to 20 regulatory submissions in 2010-12. The company recently had 12 pending U.S. new drug applications and supplemental filings. An estimated 40% of revenue, however, remains vulnerable over the next five years due to expired or yet-to-expire drug patents (mostly by 2012, including Lipitor). Nonetheless, management has maintained guidance for adjusted diluted EPS of $2.25-2.35 in 2012, up from an estimated $2.16-2.26 in 2011. Pfizer has signed a memorandum of understanding with China-based Zhejiang Hisun Pharmaceuticals to establish a joint venture. This ensures that Pfizer is not left out of the emerging market growth story.

The Goldman Sachs Group Inc is an American investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients.

My Take: Underperform

Shares of investment bank Goldman Sachs has underperformed in 2011 as investors worry about the future of their traditional business models given a regulatory environment that seeks to reign in risky trading practices. A weak investment climate with expectations of a global economic slowdown has depressed trading volumes across asset classes, while underwriting activity has also slowed. Investment banking revenue, meanwhile, is expected to show some growth on the back of modest increase in equity offers and deal activity during the quarter. Goldman Sachs' business model faces significant challenges in a post crisis world. While its global investment banking peers face similar pressures, the fact that 95% of its pre-tax income is from investment banking makes it one of the most geared banks to regulatory change. Goldman Sachs is highly reliant on wholesale funding, which puts it at risk during times of market dislocation and low liquidity. While Goldman may have survived the financial crisis, it remains an open question how well they will survive their alleged breaches of fiduciary duty. After peaking at 175 in January 2011, Goldman Sachs closed at 134.38 on June 2, 2011.

American International Group Inc., world leaders in insurance and financial services, is the leading international insurance organization with operations in more than one hundred thirty countries and jurisdictions.

My Take: Buy

AIG in their first quarter earnings call reported net income attributable to AIG of $269 million and after-tax operating income of $2.0 billion for the quarter ended March 31, 2011, compared to net income of $1.8 billion and after-tax operating income of $637 million for the first quarter of 2010. AIG intends to improve ROE by 400 basis points over 5 years by maintaining its industry position, reinvesting at higher yields, buying back stock and streamlining its businesses. AIG has increased their bulk reserves the last two years. AIG has substantial deferred tax assets that can offset future tax obligations (tax breaks of $25.6 billion)

Texas Instruments designs and makes semiconductors that are sold to electronics designers and manufacturers all over the world. TXN is incorporated in Delaware, headquartered in Dallas, Texas. It is the third-largest semiconductor supplier in the world. It has design, manufacturing/sales operations in more than 30 countries. It has four segments: Analog, Embedded Processing, Wireless and Other. The company also sells calculators and related products.

My Take: Buy

TXN gave a mid quarter update on 8th June. It guided revenues to be around $3.36 — 3.50 billion, compared with the prior range of $3.41 — 3.69 billion thus affecting EPS $0.51 — 0.55, compared with the prior range of $0.52 — 0.60. This was mainly due to problems at its largest wireless customer, Nokia (NYSE:NOK). On the whole, TXN expected revenue growth in its Analog and Embedded Processing to continue. Total orders were $3.58 billion were up 14 percent from the prior quarter, for the first quarter of 2011.

Phillip Morris International was spun-off from Altria (NYSE:MO) in 2008 and represents one of the largest single tobacco companies in the world with a 16% market share outside of the U.S. ,and 7 of the top 15 brands including Marlboro, Parliament, L&M, among others.

My Take: Buy

The company operates in an industry in which volumes are steadily declining in developed countries, while volume trends in most developing countries are positive. The company's opportunity to gain share in the very profitable Japanese market given the disruption at the share leader, Japan Tobacco, is very good. Its business has been particularly resilient in Asia and Latin America, Philip Morris operates in an inherently attractive industry, with high profit margins. The company benefits from significant geographic diversification, with good exposure to emerging markets (growth) and developed markets (high margins). Product innovation is improving, and the company is realizing cost savings.

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

Source: Analyzing BlackRock's Top Buys