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I discussed top buys of Morgan Stanley in a previous article. In addition to buys, it is also interesting to look at the top stocks where Morgan Stanley is booking profits and selling its holdings. The following is a list of top seven stocks where Morgan Stanley decreased its positions in the last quarter according to its latest 13F filing with SEC.



Shares Held - 06/30/2011

Shares Held - 09/30/2011

Change in shares

Cisco Systems Inc.





Autodesk Inc.




-4779694 International Ltd.





Hospira Inc.





Baidu Inc.





Chipotle Mexican Grill Inc.





Dollar Tree Stores Inc.





I believe International, Ltd. is a good short primarily due to increased competition in the Chinese online travel industry. is a travel service provider for hotel accommodations, airline tickets and packaged tours in China. Ctrip aggregates information on hotels and flights and enables its customers to make hotel and flight bookings. The Company also sells packaged tours that include transportation and accommodations, as well as guided tours in some instances. It focuses its services primarily on business and leisure travelers in China who do not travel in groups, known as frequent independent travellers.

Although, Ctrip reported strong last quarter result, it guided GAAP EBIT margin outlook of 35% (down 40.5% Q/Q). The main factor hurting the EBIT outlook was its new coupon program which Ctrip started in response to increased promotional pricing from competitors, particularly eLong (LONG). I expect Ctrip to remain very aggressive to maintain its leadership position and grow share. This is likely to come at the cost of profitability and investors may not like it. Further, there is a possibility that pricing competition becomes more intense going forward. Recently, Expedia, Inc. (EXPD) acquired Renren’s (RENN) stake in elong at $23 per ADS. Expedia’s growing interest in Chinese market means a tough competition for Ctrip.

According to consensus estimates Ctrip’s EPS is expected to be $1.11 for the current year and $1.27 for the next year. However, I see a possibility of downward revisions for the next year’s EPS and there is a possibility that the company sees YoY decline in EPS next year.

One stock in the above list where I don’t agree with Morgan Stanley and would instead go long on is Baidu. Baidu is China’s largest internet search company trading at around 30x forward PE. The stock looks cheap given its approximately 50% YoY growth rate which is likely to continue for the next several years. China is 5-8 years behind US when we compare total online advertising spend to GDP. This provides a secular tailwind for Baidu as the normalization occurs even if we expect no market growth.

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

Source: Morgan Stanley Is Decreasing Its Positions In These Top Stocks