The Bank of New York Mellon Corporation (BK) manages over $78bn in equities through its investment arm BNY Mellon Asset Management. The firm follows both value and growth investment style with an inclination towards value investing. It holds stocks for long-term and has a low turnover ratio for its positions. The following is a list of BNY Mellon's top buys from the last quarter according to their most recent 13F filing with SEC.
Shares Held as on 09/30/2011
Shares Held as on 12/31/2011
Change in shares
Kraft Foods Inc.
Microsoft has seen a positive breakout on the upside from its last 2 year trading range. It is currently trading at a forward P/E of 10x. I believe Microsoft is a good medium-term investment. Its cash cushion limits the downside, as well as enables it to make opportunistic acquisitions. 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 (NOK)-WP7 phones. I think Microsoft offers an attractive risk/reward for investors who can hold the stock for one year.
Apple Inc. also looks good, trading at 10x forward earnings despite ~$100 billion in cash and expected 43% growth in sales in the current year. Apple recently posted good December quarter results beating even the most optimistic estimates. Its guidance was also above The Street's estimates. Apple continues to remain a secular growth and market-share-gain story in the smartphone and tablet space. I would recommend buying the company's shares, given its low valuations and several upcoming catalysts over the next few quarters, such as strong iPhone 4S sell-through and anticipated iPad 3 and iPhone 5 launches this year.
Kraft Foods Inc. manufactures and markets packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products. Kraft is trading at a forward PE of 14x. Its EPS forecast for the current year is 2.28, and next year is 2.52. According to the consensus estimates, Kraft's top line is expected to grow 10.40% in the current year and 3.10% next year. Trading at a forward PE of 14, Kraft's valuations are in line with its peers, despite its above-average growth rate. I believe this will change going forward, as Kraft is planning to split up its high-growth Snacks business and the stable return Grocery business in FY12. This will highlight the above peer growth profile of the global snacks business, and hence help the company achieve a better valuation.