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10 Longest-Held Stocks of Top-Rated Mutual Funds (Update1)


(Story updated to add that Goldman Sachs downgraded Whole Foods Market to "neutral" from "buy" on valuation concerns.)

BOSTON ( TheStreet) -- Stock market experts are saying there's are still a lot of economic issues to worry about despite the first quarter's stellar performance. That should have investors thinking about rebalancing their portfolios to preserve some of those gains.

So with a view toward turning to more conservative, less volatile stocks, I reviewed the portfolios of eight of Morningstar's most highly rated big mutual funds to search out stocks that those funds have held the longest. Such longevity imparts a greater degree of confidence in them on the part of the fund managers.

Given most mutual fund managers' reputations as quick-on-the-draw traders, these funds have held some stocks for a surprisingly long time, including one 28-year-old pick. But it's worth noting that many fund managers change the size of their allocation to a particular stock or it changes due to other variables. And some funds may close out positions in long-held stocks only to reinitate them at a more opportune share price.

The $21 billion American Funds American Mutual Fund (AMRMX) has owned computer-industry bellwether International Business Machines ( IBM) since 1984. Its next-oldest holding is drugmaker Bristol-Myers Squibb ( BMY), which it bought in 1993.

Clearly, the fund's managers think the old fellas still have room to run as both stocks are currently in the fund's top 10 holdings.

The $5.5 billion Sequoia (SEQUX) isn't far behind in the longevity race, as it has owned Warren Buffett's Berkshire Hathaway (BRK.B) since 1990. And the fund's managers still have faith in its value as Berkshire is currently the second-largest portfolio holding at 7.7% of the fund.

Sequoia owns only 37 stocks. It has an average annual return of 24% over three years.

Given its 931-stock portfolio, a stock could potentially hide out for decades in the $36 billion Fidelity Low-priced Stock Fund's ( FLPSX) portfolio, but that's not the case, given this fund's sterling track record. Although it has owned the aviation and marine fuel services firm World Fuel Services (INT) since 1991 and curling iron maker Helen of Troy Ltd. (HELE) since 1995, both stocks are earning their keep.

The Fidelity fund is up 14% this year and has a three-year average annual return of 28%.

On the other end of the spectrum of portfolio size, the focused, 28-stock portfolio of the FMI Large Cap Fund (FMIHX) has held a stake in Kimberly-Clark (KMB), the maker of consumer products such as Kleenex and Kotex, for a decade, and it's now its eighth-largest holding at 4% of the portfolio. The $5 billion fund has a three-year average annual return of 22%.

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