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JP Morgan Chase and Co. (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 to potential risk, or temporary mispricings due to market overreactions.

The following is a list of top 10 holdings (by market value) of JP Morgan Chase and Co.

Stock

Symbol

Shares Held - 06/30/2011

% of Portfolio

Change in shares

Apple Inc.

AAPL

13,123,363

2.08

661,237

Exxon Mobil Corp.

XOM

53,208,782

2.04

-7,740,461

Chevron Corp.

CVX

25,437,358

1.23

1,596,079

Wells Fargo & Company

WFC

87,897,651

1.16

-196,670

Citigroup, Inc.

C

58,000,601

1.14

-486,207,065

Microsoft Corporation

MSFT

88,731,981

1.09

-34,977,042

Bank of America Corporation

BAC

204,909,812

1.06

-7,496,673

International Business Machines

IBM

12,612,984

1.02

291,256

Procter & Gamble Co.

PG

30,217,557

0.91

-2,493,285

Merck & Co. Inc.

MRK

52,519,744

0.87

5,592,120

Source: 13F filing

My favourite among above stocks are Apple and Microsoft.

Apple is a secular growth and market share gain story in the smartphone and tablet space. Apple’s competitors in both smartphone and tablet space have, so far, been unable to counter Apple’s continued market share gain in both the segments. Recently Apple’s smartphone 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's 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.

On the other hand, I still remain skeptical about banks with weaker balance sheets like Bank of America and would avoid the stock. If one has to take a position in banking stocks, I would recommend going for well capitalized names like Wells Fargo where the risk-rewards are more balanced.

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):

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 $8.61 and next year is $8.89. According to consensus estimates, its top line is expected to grow 23.20% in the current year and 6.30% next year.

Chevron Corporation manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in petroleum operations, chemicals operations, mining operations, power generation and energy services. Upstream operations consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil by international oil export pipelines; transporting, storage and marketing of natural gas, and a gas-to-liquids project. Downstream operations consist of refining of crude oil into petroleum products marketing of crude oil and refined products. Chevron's EPS forecast for the current year is $13.51 and next year is $13.28. According to consensus estimates, its top line is expected to grow 31.30% in the current year and 11% next year.

Citigroup Inc. is a global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services. Citigroup's EPS forecast for the current year is $3.98 and next year is $4.94. According to consensus estimates, its top line is expected to decline 7.80% in the current year and grow 4.40% next year.

International Business Machines Corporation is an information technology company. It operates under five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. IBM's EPS forecast for the current year is $13.31 and next year is $14.76. According to consensus estimates, its top line is expected to grow 7.80% in the current year and 3.90% next year.

The Procter & Gamble Company is focused on providing consumer packaged goods. The Company’s products are sold in more than 180 countries primarily through mass merchandisers, grocery stores, membership club stores, drug stores and high-frequency stores, the neighborhood stores, which serve many consumers in developing markets. It has on-the-ground operations in approximately 80 countries. P&G's EPS forecast for the current year is $4.23 and next year is $4.61. According to consensus estimates, its top line is expected to grow 6.30% in the current year and 4.50% next year.

Merck & Co., Inc. is a global healthcare 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 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 3.70% in the current year and 1.20% next year.

Source: JPMorgan Chase & Co.'s Top 10 Holdings