Founded on May 1, 1975, by John C. Bogle, Vanguard Group, Inc. is an investment advisor firm managing approximately $1.6 trillion in assets. The firm manages the Vanguard series of mutual funds in addition to other funds and caters to individual and institutional investors. As per its latest 13F filing, it had $631.7 bn worth of position in equities.
I discussed Vanguard Group's Top Buys in a previous article. In addition to buys, it is also interesting to have a look at the top stocks where Vanguard is booking profit and selling its holdings. The following is a list of Vanguard's top five sells by market value in the last quarter, as released in the most recent 13F filing with the SEC.
Shares Held - 09/30/2011
Shares Held - 12/31/2011
Change in shares
Novellus Systems Inc.
Among above stocks, I believe Amgen, Hewett-Packard and Expedia are good short candidates at current levels.
Amgen Inc., a biotechnology company, discovers, develops, manufactures and markets human therapeutics based on advances in cellular and molecular biology in the United States, Europe and Canada. Its flagship drugs include Aranesp, Epogen and Neupogen.
Although the company reported inline last quarter results, I expect its fundamentals to deteriorate going forward. Amgen is entering a transition phase in which its drug pipeline needs to improve for investors to be comfortable with its long-term growth prospects. With decline in Epogen and Arnesp sales due to increasing competition in the mature market, I see little upside for Amgen in the near term. Also, I don't see much likelihood of Amgen's bone drug Xgeva getting approval from FDA for prevention of bone metastases in high-risk prostate cancer. Although, Amgen's late stage pipeline is starting to mature, potential catalysts look thin in 2012. At the current price Amgen's shares reflect a too-optimistic view that revenue from eroding franchises can be replaced and hence I will recommend a sell on the stock.
Hewlett Packard Company is another good short candidate. Hewlett Packard is an American multinational that provides products, technologies, software solutions and services to individual consumers and businesses. Its products include PCs, workstations, printers and scanning devices. In addition it provides consulting, outsourcing and technology services along with enterprise servers and information management solutions.
Recent reads through Cannon (CAJ) and Lexmark (LXK) indicate disappointing trends in the printer market. Revenue slowdown in the U.S. and macro concerns in Europe are likely to continue. Canon's Q4 performance and flat revenue guidance for 2012 could mean additional near-term pressure on HPQ's estimates.
In addition, PCs and servers are also expected to be areas of weakness for HPQ as indicated by a difficult demand environment during December. Further, investments in R&D and S&M and high interest expense are likely to weigh on its earnings. It is likely that Q1 2012 revenue and earnings could miss the consensus estimates.
With a high exposure to the eurozone, secular declines in printers and PCs and foreign exchange pressures, I believe that HP's stock price could see a decline going forward.
Expedia, Inc. is an online travel company. The company makes available, on a stand-alone and package basis, travel products and services provided by numerous airlines, lodging properties, car rental companies, destination service providers, cruise lines and other travel product and service companies.
After Trip Advisor's (TRIP) spin-off with Expedia, New Expedia's market position in online travel has become overly exposed to low growth low margin Domestic Segment and Air Segments. Its positioning in other key markets such as Europe, APAC and Latin America is also second to Priceline (PCLN). Going forward, Expedia's domestic hotel business could lose share to Priceline's agency hotel model. Its air and packaging business is also likely to remain weak due to rising airfares, weak growth in airline capacity and a push by air suppliers for direct-connect agreements. Additionally, Expedia's margins are also likely to remain under pressure in 2012 given increased investment levels and an increasingly competitive environment (for eg. Google's (GOOG) recent launch of flight search on its site). The company's recently reported results were not impressive either. Although, its EPS came above consensus, its revenue fell short of the street expectations. I recommend a short to medium term sell on Expedia given the above mentioned headwinds.