Seeking Alpha
Profile| Send Message| ()  

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.

Investment Strategy: Goldman Sachs Asset Management US employs various investment styles including growth, value and international strategies. The firm diversifies portfolios across all market caps, geographic location and industries. Goldman Sachs Asset Management utilizes fundamental analysis in allocating assets and selecting stocks. For the value investments, the firm invests in quality companies selling at an attractive valuation. Goldman Sachs Asset Management seeks businesses with sustainable operating fundamentals, competitive advantage, strong cash flow and balance sheets, ability to earn above their cost of capital and excellent stewardship of capital. The growth portfolios invests in high quality companies that exhibits strong business franchise, experienced management team, sustainable competitive advantage and favourable long-term prospects.

The following is a list of its top ten holdings, as released in its most recent 13F filing with the SEC.

Stock

Symbol

Shares Held - 06/30/2011

% of Portfolio

Change in shares

Apple Inc.

AAPL

6,085,273

1.34

325,401

Dollar General Corporation

DG

52,474,939

1.17

0

Pepsico, Inc.

PEP

22,129,957

1.03

-2,207,613

Google Inc.

GOOG

2,879,736

0.96

201,480

Microsoft Corporation

MSFT

55,670,385

0.95

-25,440,900

General Electric Co.

GE

71,816,651

0.89

7,944,459

Qualcomm Incorporated

QCOM

23,537,627

0.88

-1,168,738

Schlumberger Limited

SLB

15,330,714

0.87

-1,445,132

Education Management Corporation

EDMC

54,268,788

0.85

0

JPMorgan Chase & Co.

JPM

28,842,006

0.78

1,710,683

My favourite long candidates among above stocks are Apple and Microsoft.

Apple is a secular growth and market share gain story in the smart phone and tablet space. Apple’s competitors in both smart phone and tablet space have, so far, been unable to counter Apple’s continued market share gain in both the segments. Recently Apple’s smart phone competitor Research in Motion (RIMM) declared its quarterly results. Its BlackBerry units plummeted 20% Q/Q while PlayBook shipments tanked 60%. I believe it is only a matter of time before the iPhone and iPad challenge RIMM's enterprise dominance. At 12x next year EPS and cash in hand of ~ $75 bn, it is one of the best stocks to buy in current uncertain times. The coming iPhone 5 launch will likely be the next catalyst for the stock.

Microsoft stock is another undervalued Tech story. Microsoft’s EPS forecast for the current year is $2.86 and next year is $3.13. According to consensus estimates, its top line is expected to grow 6.50% in the current year and 6.90% next year. At 8.6x next year 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 (NOK) WP7 phones.

In addition, Microsoft’s excess cash position provides a downside cushion. Microsoft recently raised its dividend by 25% and it has significant potential to increase its dividend pay-out ratio further to supports the stock. 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 business, growth expectations (topline and bottomline):

Dollar General Corporation is a discount retailer. The company offers a selection of merchandise, including consumables, seasonal, home products and apparel. Dollar General's EPS forecast for the current year is $2.29 and next year is $2.62. According to consensus estimates, its top line is expected to grow 12.80% in the current year and 7.50% next year.

PepsiCo, Inc. is a global food, snack and beverage company. The company’s brands include Quaker Oats, Tropicana, Gatorade, Lay’s, Pepsi, Walkers, Gamesa and Sabritas. The company is organized into four business units: PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe and PepsiCo Asia, Middle East and Africa. PepsiCo's EPS forecast for the current year is $4.44 and next year is $4.82. According to consensus estimates, its top line is expected to grow 15.20% in the current year and 4.70% next year.

Google Inc. generates revenue primarily by delivering online advertising. The company focuses on areas, such as search, advertising, operating systems and platforms, and enterprise. Businesses use its AdWords program to promote their products and services with targeted advertising. In addition, the third parties that comprise the Google Network use its AdSense program to deliver relevant ads that generate revenue and enhance the user experience. Google's EPS forecast for the current year is $35.48 and next year is $42.06. According to consensus estimates, its top line is expected to grow 30.20% in the current year and 21.10% next year.

General Electric Company is a diversified technology and financial services corporation. The products and services of the company range from aircraft engines, power generation, water processing, and household appliances to medical imaging, business and consumer financing and industrial products. It serves customers in more than 100 countries. Its segments include Energy Infrastructure, Technology Infrastructure, NBC Universal, GE Capital and Home & Business Solutions. General Electric's EPS forecast for the current year is $1.38 and next year is $1.58. According to consensus estimates, its top line is expected to decline 1.90% in the current year and grow 1.20% next year.

QUALCOMM Incorporated designs, manufactures and markets digital wireless telecommunications products and services based on its CDMA technology and other technologies. The company operates through four segments: Qualcomm CDMA Technologies; Qualcomm Technology Licensing; Qualcomm Wireless & Internet, and Qualcomm Strategic Initiatives. QUALCOMM's EPS forecast for the current year is $3.19 and next year is $3.49. According to consensus estimates, its top line is expected to grow 35.10% in the current year and 16.60% next year.

Schlumberger Limited is a supplier of technology, integrated project management and information solutions to the international oil and gas exploration and production industry. Schlumberger business consists of five segments: it Oilfield Services, WesternGeco, M-I SWACO, Smith Oilfield and Distribution. Schlumberger's EPS forecast for the current year is $3.81 and next year is $5.45. According to consensus estimates, its top line is expected to grow 44.10% in the current year and 19.30% next year.

Education Management Corporation is a provider of post-secondary education in North America. The company offers academic programs to its students through campus-based and online instruction, or through a combination of both. The company’s educational institutions offer students the opportunity to earn undergraduate and graduate degrees, including doctoral degrees, and certain specialized non-degree diplomas in a range of disciplines. These disciplines include design, media arts, health sciences, psychology and behavioral sciences, culinary, fashion, business, legal, education and information technology. EDMC's EPS forecast for the current year is $1.51 and next year is $1.53. According to consensus estimates, its top line is expected to decline 0.20% in the current year and grow 3.40% next year.

JPMorgan Chase & Co. is a financial holding company. The bank and nonbank subsidiaries of JPMorgan Chase operate nationally, as well as through overseas branches and subsidiaries, representative offices and subsidiary foreign banks. The company's activities are organized into six business segments: Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management. JPMorgan's EPS forecast for the current year is $4.81 and next year is $5.37. According to consensus estimates, its top line is expected to decline 3.20% in the current year and 1.60% next year.

Source: A Look At Goldman Sachs' Top 10 Holdings