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JP Morgan Chase and Co. (NYSE:JPM) manages ~ $200 bn in equity assets primarily through its asset management subsidiary JP Morgan Asset Management. The firm caters to high net-worth individuals, corporations, pension and profit sharing plans, charitable organizations and institutions.

Investment Strategy: JP Morgan Asset Management offers various strategies, including active extension, behavioral, core, enhanced, growth, long/short, quantitative and value. Investments are carried out through U.S., international and global portfolios. Emphasis is placed on identifying and monitoring key valuation and risk metrics. For the domestic investments, the firm primarily employs fundamental research to identify favorable investments. A three-step process is applied, combining research, valuation and stock selection. J.P. Morgan purchases companies that are undervalued and considers selling them when they appear to be overvalued. In addition to valuation, the firm looks for a catalyst that could prompt a rise in a stock's price, a high potential reward compared with potential risk, or temporary mispricings due to market overreactions.

I discussed the Top Buys of JP Morgan Chase & Co. in a previous article. In addition to buys, it is also interesting to have a look at top companies where JP Morgan Chase & Co. is booking profit and selling its holdings. The following is a list of its top stocks sells in the last quarter, as released in its most recent 13F filing with the SEC.

Stock

Symbol

Shares Held - 03/31/2011

Shares Held - 06/30/2011

Microsoft Corporation

MSFT

123709023

88731981

Exxon Mobil Corp.

XOM

60949243

53208782

Freeport-McMoran Copper & Gold Inc.

FCX

26226561

17296387

Abbott Laboratories

ABT

32881964

25821447

Philip Morris International, Inc.

PM

20368530

15157902

Pfizer Inc.

PFE

100575419

85167280

Walt Disney Co.

DIS

28084958

20005044

My favourite short from the above listed stocks is Walt Disney Co. and I believe its stock price is likely to underperform going forward. Recently Walt Disney reported its third quarter earnings, which surpassed Wall Street expectations but the stock corrected due to uncertain outlook over consumer spending. We may likely be heading into another recession and Walt Disney will likely be among the first to get impacted as consumers curb trips to movie theatres and theme parks, or advertisers cut back spending. As of now, Walt Disney is not seeing any major pull back but things can turn pretty rapidly. Even before any actual EPS downgrade or earnings impact, multiples can contract further due to recessionary fears.

One of the stocks in above list where I don’t agree with JP Morgan and would actually like to go long on is Microsoft. Microsoft is trading at just 8.5x current year (June 12) EPS, which is very attractive. At these levels, I don’t think the market is pricing in any of the positive initiatives the company is taking. Some of the important initiatives that can drive meaningful growth over the next one year are the Windows 8 launch, Office 365, which is gaining traction and a successful launch of Nokia's (NOK) WP7 phones. In addition, Microsoft’s excess cash position provides a downside cushion. As valuations of other tech companies reach more reasonable levels due to the market correction, several attractive acquisition opportunities may arise. I think Microsoft offers an attractive risk reward for investors who can hold the stock for the next couple of years.

For other stocks in the above list, here are some of the specifics about these companies, including a brief description of their businesses, growth expectations (top line and bottom line):

Exxon Mobil Corporation is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products. It also has interests in electric power generation facilities. Exxon's EPS forecast for the current year is $8.57 and next year is $9.04. According to consensus estimates, its top line is expected to grow 21.70% in the current year and 8.10% next year.

Freeport-McMoRan Copper & Gold Inc. is a copper, gold and molybdenum mining company. FCX's EPS forecast for the current year is $5.90 and next year is $6.17. According to consensus estimates, its top line is expected to grow 21.80% in the current year and 3.00% next year.

Abbott Laboratories is engaged in discovery, development, manufacture, and sale of a diversified line of healthcare products. It has four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. Abbott's EPS forecast for the current year is $4.63 and next year is $4.99. According to consensus estimates, its top line is expected to grow 10.40% in the current year and 4.50% next year.

Philip Morris International Inc. through its subsidiaries and affiliates and their licensees, is engaged in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States of America. Philip's EPS forecast for the current year is $4.77 and next year is $5.21. According to consensus estimates, its top line is expected to grow 10.70% in the current year and 4.70% next year.

Pfizer Inc. is a research-based, global biopharmaceutical company. The Company operates in two segments: Biopharmaceutical and Diversified. Pfizer's EPS forecast for the current year is $2.25 and next year is $2.28. According to consensus estimates, its top line is expected to decline 2% in the current year and 5.50% next year.

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

Source: Top Sells of JP Morgan Chase & Co.