This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

10 New Stocks on All-Star Fund Managers' List

Stocks in this article: V LOW RDS.A EBAY AMAT PH AMZN LVS RSG CMP

BOSTON ( TheStreet) -- Who better to take investment cues from than some of the highest-rated mutual fund managers around?

Their buying habits should provide some direction for investors trying to decide how to play the shaky market this year after a bang-up first quarter and the desultory results since then.

According to a report Tuesday by fund-rating firm Morningstar, the first-quarter activities of the 26 top mutual fund managers it tracks in its Ultimate Stock Pickers series "tells us that our managers were anticipating an end to the run-up in the markets" so they built up cash to meet potential redemption requests, and perhaps also to keep some powder dry for future purchases if the market regains some semblance of normality.

And that conservative stance came during one of the strongest first-quarter performances for the S&P 500 in over a decade when it returned 12%. The index has since lost ground and is now up 5.7% on the year.

Morningstar's analysts sift through the quarterly reports of these elite funds it tracks in order to identify their top new buys, sells or changes to existing positions.

Big new buys catch the eye, of course, since they impart a greater degree of confidence in a stock on the part of a fund manager. "New-money purchases provide us with the most insight into what our top managers think are the most attractive buying opportunities, as portfolio managers tend to put money to work in new names only when their purchase decision carries a very high degree of conviction," Morningstar says.

The firm also tracks what it calls "high-conviction" purchases, which represent fund managers' additions to already existing holdings in funds. They are of slightly less significance since "it is far easier for managers to put money to work in holdings they are already comfortable with than it is for them to make a bet on a name that is new to the portfolio," Morningstar analyst Greggory Warren wrote.

The biggest new additions by the Ultimate Stock Pickers in the first quarter, which are based on the percentage of the portfolio they represent, are an eclectic bunch, so there's no sector bet for an investor to follow. The new buys include a company that makes chemical salt for use in de-icing roadways in Compass Minerals International (CMP), the nation's second-largest trash collector in Republic Services (RSG), as well as one of the hottest stocks of the past decade as a harbinger of the Internet revolution in on-line retailing in Amazon (AMZN). And, finally, the Asia-focused casino-resort builder Las Vegas Sands (LVS) helps round out some of the managers' top new picks.

Some of the more notable "conviction buys," that is, fund managers' additions to existing portfolio positions, include Parnassus Equity Income Fund's (PRBLX ) new purchase of snack and beverage firm Pepsi (PEP), while the closely followed $8 billion Yacktman Fund (YACKX) followed suit such that Pepsi was its single-largest holding at the end of March at just over 9% of the portfolio.

And in a curious move, the $8 billion Fairfax Financial Holdings ( FRFHF), a Canadian reinsurance and stock investing firm that is on the Morningstar list, bumped up its stake in the troubled BlackBerry smartphone maker Research In Motion (RIMM) such that at the end of the first quarter, RIMM made up 19% of its portfolio.

Research In Motion has also been a favorite of the Yacktman Fund, but it is now just under 1% of the portfolio.

Among the distinguished members of the 26-member Ultimate Stock Pickers roster include: John Gunn, who manages Dodge & Cox Stock (DODGX), and Warren Buffett's Berkshire Hathaway (BRK.B).

Here are 10 stocks that Morningstar's "Ultimate Stock Picker" fund managers initiated positions in during the first quarter, ranked in inverse order of analysts' "buy" ratings:

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs