Top 10 Stocks BlackRock Is Selling

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 |  Includes: AMP, GE, INTC, KO, MSFT, RTN, TRV, TSN, TXN, VZ
by: Rash Menaria

I discussed the Top Stocks that BlackRock is buying in a previous article. In addition to the top buys, it is also interesting to look at the stocks BlackRock recently turned bearish on and reduced its position in. The following is a list of top ten stocks in which BlackRock decreased its position in the last quarter.

Stock

Symbol

Shares Held 06/30/2011

Shares Held 09/30/2011

Change in shares

Verizon Communications Inc.

VZ

14453731

12716778

-1736953

Intel Corporation

INTC

20785341

18191385

-2593956

General Electric Co.

GE

42798697

39440957

-3357740

Microsoft Corporation

MSFT

32663067

30736485

-1926582

Texas Instruments Inc.

TXN

5939685

4394779

-1544906

The Coca-Cola Company

KO

7347773

6812087

-535686

The Travelers Companies Inc.

TRV

4756204

4182025

-574179

Ameriprise Financial Inc.

AMP

1765482

1108917

-656565

Raytheon Co.

RTN

3859897

3261728

-598169

Tyson Foods Inc.

TSN

2834924

1476364

-1358560

Click to enlarge

Source: 13F filing

Raytheon appears to be a good short at current levels. Raytheon is a developer and manufacturer of advanced technology for: the US military, NASA, foreign Governments, various Federal and State agencies, and selected commercial customers. RTN's products include: Integrated Defence, Intelligence and Information, Missile, Network Centric, and Space and Airborne systems. Like all defence companies, a key growth driver for Raytheon is government spending. Given the pressure on the federal budget, it clearly is not the place to be. Further, the Department of Defence’s crack down on premium contractor/suppliers doesn’t hold well for Raytheon, which has a few well-above average segments.

GE and Verizon are other good exits from BlackRock. GE is likely to see headwinds from weak pricing, a difficult European environment and decelerating growth in emerging markets, while Verizon is seeing secular pressure from declining wireline business and pension dilution. Further, high valuation (15x Forward PE) limits any potential upside for Verizon in the near term.

Two stocks where I don’t agree with BlackRock and would instead like to go long on are Coca-Cola and Microsoft. 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.

Microsoft is trading at a forward PE of 8.06. I believe Microsoft is a good medium-term investment in these uncertain times. Its cash cushion limits the downside as well as enables it to make opportunistic acquisitions if the valuations of target companies reach attractive levels. In addition, Microsoft is also taking a lot of new initiatives, which can drive meaningful growth over the next few years. Some of the major catalysts for the stocks are the Windows 8 launch, Office 365 gaining traction and a successful adoption of Nokia-WP7 phones. I think Microsoft offers an attractive risk reward for investors who can hold the stock for one year.

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