Top Stocks That Goldman Sachs Is Selling

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 |  Includes: BAX, BIIB, GS, IRM, KO, MSFT, NFX, STJ
by: The Analyst Hub

Goldman Sachs (GS) group manages more than $100 bn in equities primarily through its asset management subsidiary Goldman Sachs Asset Management. The firm manages the Goldman Sachs series of funds apart from other series of mutual funds and caters to individuals and institutions.

I discussed the "Top Stocks Goldman Sachs is Buying" in a previous article. In addition to buys, it is also interesting to have a look at top companies where Goldman is booking profit and selling its holdings. The following is a list of its top 7 sells (market value wise) 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

Change in shares

Microsoft Corporation

MSFT

81111285

55670385

-25440900

Biogen Idec Inc.

BIIB

5961581

1143461

-4818120

The Coca-Cola Company

KO

12251375

5380807

-6870568

Newfield Exploration Co.

NFX

11285684

6114154

-5171530

Baxter International Inc.

BAX

7802073

2380778

-5421295

Iron Mountain Inc.

IRM

9163082

628679

-8534403

St. Jude Medical Inc.

STJ

17068796

13234646

-3834150

Click to enlarge

One of the stocks in above list where I don’t agree with Goldman and would actually like to go long 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.

In addition to Microsoft, defensive stocks like Coca Cola and Baxter International also look attractive due to current macro uncertainty. With its stable business and high dividend yield, Coca Cola provides a safe haven to investors in current uncertain times. Medical-supplies companies like drug-infusion pump maker Baxter International Inc. also look attractive because of their stable unit growth and lower exposure to price cuts.

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

Biogen Idec Inc. is a global biotechnology company focused on discovering, developing, manufacturing and marketing products for the treatment of neurological disorders and other serious diseases. The company’s products include AVONEX, TYSABRI, FUMADERM and RITUXAN. Biogen's EPS forecast for the current year is $5.87 and next year's is $6.34. According to consensus estimates, its top line is expected to grow 4.90% in the current year and 4.30% next year.

Newfield Exploration Company is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas properties. The company’s domestic areas of operation include the Mid-Continent, the Rocky Mountains, onshore Texas, Appalachia and the Gulf of Mexico. Internationally, the company operates in Malaysia and China. Newfield’s EPS forecast for the current year is $4.70 and next year is $6.12. According to consensus estimates, its top line is expected to grow 45.10% in the current year and 25.90% next year.


Iron Mountain Incorporated
is an information management services company. The Company’s information management services are divided into three service categories: records management services, data protection and recovery services, and information destruction services. Iron Mountain’s EPS forecast for the current year is $1.26 and next year is $1.52. According to consensus estimates, its top line is expected to decline 1.50% in the current year and grow 3.50% next year.


St. Jude Medical, Inc.
develops, manufactures and distributes cardiovascular medical devices for the global cardiac rhythm management, cardiology and cardiac surgery and atrial fibrillation therapy areas and neurostimulation medical devices for the management of chronic pain. St. Jude operates in four segments: Cardiac Rhythm Management, Cardiovascular, Atrial Fibrillation and Neuromodulation. St. Jude Medical's EPS forecast for the current year is $3.28 and next year is $3.64. According to consensus estimates, its top line is expected to grow 10.00% in the current year and 7.00% next year.

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