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Wellington Management Company, LLP is an investment advisory and hedge fund firm managing over $300bn in equity assets. The firm manages Hartford series of funds in addition to other funds. WMC caters to individuals, institutions and pension and profit sharing plans, charitable organizations, banking and corporations.

Investment Strategy: Wellington Management employs various strategies covering domestic and international markets. The firm looks for attractive investments across different market-cap and style spectrums. The investment process generally involves understanding global trends and outlooks for securities and sectors, and evaluating potential candidates on valuation, models, opinion and recommendations from different sources. The global value strategy focuses on financially sound companies that are out of favor, display potential for above average returns, and are selling at low P/E ratios. The stock selection process combines fundamental research and valuation analysis from both quantitative and qualitative perspectives. Investments are primarily made in large-cap companies in developed markets, as well as in global companies located in emerging markets. Wellington Management Company also applies capital markets, currency, macroeconomic and technical analyses. The firm carries out proprietary research shared by various teams located globally.

The following is a list of Wellington’s top 7 buys in the last quarter.

Stock

Symbol

Shares Held - 03/31/2011

Shares Held - 06/30/2011

Change in shares

Pioneer Natural Resources Co.

PXD

1,542,625

10,408,742

8,866,117

Sprint Nextel Corp.

S

33,773,122

136,237,389

102,464,267

Texas Instruments Inc.

TXN

22,213,057

38,992,095

16,779,038

Petroleo Brasileiro

PBR

45,078,900

60,556,671

15,477,771

Merck & Co. Inc.

MRK

99,770,787

112,489,651

12,718,864

Microsoft Corporation

MSFT

73,295,879

88,952,028

15,656,149

Intel Corporation

INTC

17,720,619

35,532,870

17,812,251

Source: 13F filing

My favorite long candidate among the above stocks is Microsoft. Microsoft’s EPS forecast for the current year is $2.86 and next year is $3.14. According to consensus estimates, its top line is expected to grow 6.80% in the current year and 6.90% next year. At 8x-9x current year (June 12) EPS, I find Microsoft 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 (NYSE: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. Microsoft’s significant potential to increase its dividend pay-out ratio also supports the upside thesis.

Here are some of the specifics about the other companies on the list.

Pioneer Natural Resources Company is an independent oil and gas exploration and production company with existing operations in the United States and South Africa. Its asset base is anchored by the Spraberry oil field located in West Texas, the Raton gas field located in southern Colorado, the Hugoton gas field located in southwest Kansas and the West Panhandle gas field located in the Texas Panhandle. It has exploration and development opportunities and/or oil and gas production activities in the Eagle Ford Shale and Edwards Trend areas of South Texas, the Barnett Shale area of North Texas and Alaska, and internationally in South Africa. Pioneer's EPS forecast for the current year is $3.54 and next year is $4.90. According to consensus estimates, its top line is expected to grow 36.40% in the current year and 29.30% next year.

Sprint Nextel Corporation is a communications company offering a range of wireless and wireline communications products and services for individual consumers, businesses, government subscribers and resellers. The Company operates in two business segments: Wireless and Wireline. Sprint's EPS forecast for the current year is -$0.83 and next year is -$0.68. According to consensus estimates, its top line is expected to grow 2.90% in the current year and 2.30% next year.

Texas Instruments Incorporated is engaged in the designing and making of semiconductors that it sells to electronics designers and manufacturers worldwide. In addition, it sells calculators and related products. TI has four segments: Analog, Embedded Processing, Wireless and Other. Texas Instruments's EPS forecast for the current year is $2.31 and next year is $2.58. According to consensus estimates, its top line is expected to grow decline 0.50% in the current year and grow 4.70% next year.

Petroleo Brasileiro SA Petrobras is a Brazilian integrated oil and gas company. It operates in five segments: exploration and production; refining, commercialization and transport of oil and natural gas; petrochemicals; distribution of derivatives, electrical energy, biofuels and other renewable energy sources. Petrobras' EPS forecast for the current year is $3.81 and next year is $3.83. According to consensus estimates, its top line is expected to grow 11.70% in the current year and 8.20% next year.

Merck & Co., Inc. is a global health care company. Merck delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets through its joint ventures. Merck’s operates in four segments: the Pharmaceutical, Animal Health, Consumer Care and Alliances segments. Merck's EPS forecast for the current year is $3.73 and next year is $3.84. According to consensus estimates, its top line is expected to grow 3.60% in the current year and decline 1.30% next year.

Intel Corporation is a semiconductor chip maker company. The Company designs and manufactures computing and communications components, such as microprocessors, chipsets, motherboards, and wireless and wired connectivity products, as well as platforms that incorporate these components. Intel's EPS forecast for the current year is $2.36 and next year is $2.47. According to consensus estimates, its top line is expected to grow 24.00% in the current year and 5.70% next year.



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

Source: Wellington's Top 7 Value Buys