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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 - Get Report) 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 - Get Report) 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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SYM TRADE IT LAST %CHG
ADP $79.84 0.15%
BMY $64.36 0.09%
BRK.B $141.76 0.74%
INT $47.11 1.60%
IBM $159.39 0.20%

Markets

Chart of I:DJI
DOW 17,541.41 +100.82 0.58%
S&P 500 2,078.99 +11.35 0.55%
NASDAQ 5,052.3810 +12.6050 0.25%

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