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The following is a list of top ten stocks (by market value) that J.P. Morgan Chase and Co. sold in the last quarter:

Stock

Symbol

Shares Held - 06/30/2011

Shares Held - 09/30/2011

% Chance Since Sept 30, 2011

Exxon Mobil Corp.

XOM

53,208,782

44,528,807

4.09%

Pepsico Inc.

PEP

15,769,884

8,760,602

0.91%

International Business Machines

IBM

12,612,984

10,257,993

1.29%

Chevron Corp.

CVX

25,437,358

21,472,978

1.35%

3M Co.

MMM

9,611,833

4,761,680

5.17%

EOG Resources Inc.

EOG

7,481,471

2,888,386

30.12%

Apple Inc.

AAPL

13,123,363

12,283,377

-5.51%

Walt Disney Co.

DIS

20,005,044

9,468,610

12.00%

The Coca-Cola Company

KO]

24,420,428

20,167,265

-4.49%

Abbott Laboratories

ABT

25,821,447

20,260,418

1.77%

Source: 13F filing.

PepsiCo and Walt Disney appear to be good shorts among the above stocks. However, I don’t agree with J.P. Morgan on IBM, Apple or Coca-Cola; I believe they are good buys instead of sells.

Slowing growth and market shares losses against its key rival Coca Cola makes Pepsi a perfect short target. There are some expectations that company may announce some cost-cutting and restructuring measures early next year, and hence the stock might be show some strength going into 2012. However, I don’t see any likelihood of the stock outperforming.

It is increasingly becoming clear that we are headed into another recession and in times of slowdowns; announcements have little impact unless accompanied by actual execution. When Coca-Cola faced similar problems in the past, it took it around 5 years of disciplined focus on brand building, innovation, bottler re-investment to improve trends. Clearly, it is not going to be an easy ride for Pepsi either.

Walt Disney is another stock I would recommend shorting. Although the company reported strong last quarter results, I am worried about the cuts in the advertising budgets due to slowing economy. Park attendance may also be adversely affected as consumers become more cautious towards discretionary spending.

Pepsi’s pain is Coca-Cola’s gain, and I like Coco-Cola for this very reason. Further, Coca-Cola is a high-dividend-yielding company with a consistent growth rate and stable business. It is a good defensive pick for the current uncertain environment.

IBM is a consistent performer, and has outperformed S&P 500 in 5 out of the past 6 years. It has doubled its profit in the last decade and has steadily expanded margins by over 800 bps following a strategy to focus on higher margin enterprise software/ services/mission-critical hardware business while divesting commodity businesses (PCs, printers, and hard disk drives). It is one of the most defensive tech vendors, and its high visibility annuity business accounts for more than 50% of revenue and 70% of profits. Warren Buffet recently disclosed his stake in the company and IBM rightly fits the “Buffet Criteria” of a good business available at a reasonable valuation.

Apple is another stock where I would recommend going long on. I like Apple despite of its last quarter earnings miss. The miss was primarily due to lower than expected iPhone sales as customers waited for the 4S launch which was announced earlier in October month. Given the initial momentum iPhone 4S has seen, I don’t think light iPhone shipments in September quarter should be a cause for concern. More importantly, Apple has guided C4Q above consensus on both revenue and EPS. This is important as Apple is a conservative company and there have been only three instances since 2006 when company has guided better than analyst expectations.

I believe Apple’s fundamentals are firmly intact. Apple continues to remain a secular growth and market share gain story in the smart phone and tablet space. I would recommend buying the company given its low valuations and several upcoming catalysts over next few quarters, like strong iPhone 4S sell-through, holiday sales, and anticipated iPad 3 and iPhone 5 launches next year.

Source: 10 Stocks J.P. Morgan Chase Is Selling