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.
I discussed BNY Mellon's Top Buys in a previous article. In addition to buys, it is also interesting to have a look at the top stocks where BNY is booking profit and selling its holdings. The following is a list of BNY Mellon's top sells 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
Willis Group Holdings Public Limited Company
BMC Software Inc.
I believe Amgen and Walgreen are good sells at current levels. However I don't agree with BNY on Intel and BMC Software and believe these companies are a buy instead of sell.
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.
Walgreen Co., together with its subsidiaries, operates a drugstore chain in the United States. Walgreen is expected to be adversely affected from its ongoing dispute with Express Scripts (ESRX). Its sales are getting negatively impacted due to this dispute as reflected in its poor monthly sales data. With no resolution in sight in the near term, I remain bearish on Walgreen. On the other hand, CVS Caremark (CVS) is all set to benefit at the cost of Walgreen and hence provide much better risk reward if one wants to go long on the drugstore industry.
BMC Software Inc. provides IT service management solutions to large enterprises globally. BMC's software solutions help companies automate and manage their processes in mainframe, distributed, virtualized and cloud computing environments as well as in applications and databases.
The company got adversely affected by sales management issues majorly in ESM business in the previous quarters. However, I believe the worst is over for the company. The company's management has sent some encouraging signals and they are in the process of re-vamping their sales strategy through tiered sales force and indirect channels. The company is ahead of its plan on hiring and lowering attrition. I expect this to improve productivity through the year.
After a rough H2 2011, BMC is expected to make incremental progress through 2012 in ESM license bookings as its new strategy begins to have an impact. Going forward, BMC's Mainframe Service Management business is expected to be stable and keep generating significant cash flows. Growth trends also remain strong in the Cloud and SaaS business.
BMC's stock has significantly underperformed since July 2011 and is currently trading at a discount to its peers' average EV/EBITDA. In my view, BMC is well positioned to benefit from cloud/virtualization opportunities in the medium term. This coupled with its stable cash flow generation from MSM business and cheap valuation makes it a good buy.
Intel is the world's largest supplier of semiconductor chips. The company designs and manufactures microprocessors, boards, and semiconductor components that are used in computers, servers, and networking and communication products. The company is the world's largest supplier of microprocessors, with a worldwide market share of more than 75%.
Intel reported good Q4 results and gave better than expected guidance for 2012. The Enterprise and emerging market strength pushed its PC sales while strong data traffic drove Data Centre revenues. Going forward, improving trends in Cloud and High Performance Computing are expected to drive server processor growth. The company's recent QLogic acquisition has increased its breadth of product line and strengthen its position in super computing market.
Intel's Data Centre Capex guidance further supports the server processors' growth and upside potential to its margins in 2012. With new product cycles (Ivy Bridge, Romley and Medfield) and investments in its manufacturing and R&D capabilities, Intel is expected to gain market share against its competitor AMD.
Intel is committed to returning cash to its shareholders with a healthy 3.1% dividend yield and $4 billion in stock repurchases last year. It has authorization for further $10 billion repurchase. Even with modest PC trends, the server markets growth provides with considerable upside potential for its near term earnings and multiple expansion.