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%.

And the $1.8 billion Yacktman Fund ( YACKX), which holds only 42 stocks and has an annual turnover rate of 3%, has owned Lancaster Colony Corp. ( LANC), a manufacturer of food products, automotive accessories, glass products, and candles, since 2000. It is by far its oldest position.

And there are a few stocks outside the large-cap fund sector that managers have decided to buy-and-hold, as well.

The $1.7 billion Wasatch Small Cap Growth Fund ( WAAEX), with a three-year average annual return of 32%, bought auto parts retailer O'Reilly Automotive ( ORLY) in the first quarter of 1994, and the stock remains a top holding at 1.6% of the portfolio. The $19 billion T. Rowe Price Mid-Cap Growth Fund ( RPMGX) has owned the stock of the upscale supermarket chain Whole Foods Market ( WFM) since the third quarter of 1998. That fund has returned 29% annually over the past three years.

And for those people seeking high-quality dividend stocks, the portfolio of the $10 billion Vanguard Dividend Growth ( VDIGX) might be a good place to look as it bought 10 such stocks about a decade ago and most of them are still among its top 10 stock holdings now, including its largest individual position, Automatic Data Processing ( ADP), at 3.1% of the fund.

Here are 10 stocks that eight top-rated mutual funds have held for a decade or more in inverse order of their longevity in a portfolio:

10. Automatic Data Processing ( ADP)

Company profile: Automatic Data Processing, with a market value of $28 billion, is in the human resources administration services industry as a provider of payroll processing and benefits administration.

Dividend Yield: 2.86%

Investor takeaway: Its shares are up 3% this year and have a 10-year, average annual return of 2.1%. Analysts give its shares eight "buy" ratings, four "buy/holds," 13 "holds," one "weak hold," and one "sell," according to a survey of analysts by S&P. S&P, which has it rated "buy," says that long-term, "we think the market for payroll outsourcing is relatively untapped, especially in the small and medium-sized business market and overseas, providing opportunities for future growth."

9. Kimberly-Clark ( KMB)

Company profile: Kimberly-Clark, a $28 billion company, is one of the world's largest health and hygiene products makers, selling bathroom tissues, diapers, feminine products and paper towels. Its brands include Kleenex, Scott, Huggies and Kotex. Non-U.S. sales are about 45% of revenue.

Dividend Yield: 4.01%

Investor takeaway: Its shares are up 1.5% this year. In the decade that it's been owned by FMI Large Cap, the shares have an average annual return of 4%. Analysts give its shares one "buy" rating, one "buy/holds," 13 "holds," and one "weak hold," according to a survey of analysts by S&P.

8. Lancaster Colony Corp. ( LANC)

Company profile: Lancaster, with a market value of $1.8 billion, is a conglomerate, as it manufactures food products, automotive accessories, glass products, and candles.

Dividend Yield: 2.17%

Investor takeaway: Its shares are up 3.6% this year and over the past 10 years, it has an average annual return of 8%. Analysts give its shares four "hold" ratings, according to a survey of analysts by S&P. Analysts estimate it will earn $3.49 per share this year and $3.96 in 2013, or a 13% increase. It's 54% owned by institutional investors.

7. Whole Foods Market ( WFM)

Company profile: Whole Foods, with a $15 billion market value, is the largest U.S. retailer of natural and organic foods, with about 300 stores in the U.S., as well as in Canada and the U.K.

Investor takeaway: Whole Foods' shares are up 20%. T. Rowe Price Mid-Cap Growth has owned it almost 14 years. It has an average annual return of 21% over 15 years. Analysts give its shares 10 "buy" ratings, four "buy/holds," and 10 "holds," according to S&P. Those same analysts project earnings of $2.34 per share this year and that they will grow by 15% next year. Goldman Sachs trimmed its rating on Whole Foods to "neutral" from "buy," late last week on valuation concerns, but raised its earnings estimates through 2014 because of strong sales outlook. Given that positive long-term outlook, Goldman upped its price target to $88 from $85.

6. Helen of Troy Ltd. ( HELE)

Company profile: Helen of Troy, with a market value of $1 billion, designs and develops hair-care appliances ranging from hair dryers and curling irons, to lighted mirrors, and hairsetters. Some of the brand names its products carry include Vidal Sassoon and Revlon as well as its own name.

Investor takeaway: Its shares are up 11% this year and have a 10-year average annual return of 9%. Analysts give its shares four "hold" ratings according to a survey of analysts by S&P. Analysts estimate it will earn $3.45 per share this year and $3.89 in 2013.

5. O'Reilly Automotive ( ORLY)

Company profile: O'Reilly, with a market value of $11.5 billion, is the second-largest auto-parts retailer in the U.S., with over 3,700 stores.

Investor takeaway: Its shares are up 14% this year and have a three-year, average annual return of 38%. Analysts give its shares six "buy" ratings, five "buy/holds," 13 "holds," and two "weak holds," according to a survey of analysts by S&P. For fiscal 2012, analysts estimate it will earn $4.52 per share and that will grow by 13% to $5.13, in 2013.

The stock is the 14th-largest holding, at 1.6% of the portfolio, at Wasatch Small Cap Growth, which has owned it for almost 20 years. In the past 15 years, its average annual return is 22%.

4. Bristol-Myers Squibb ( BMY)

Company profile: Bristol-Myers Squibb, with a market value of $57 billion, is one of the world's largest branded drug developers, with pharmaceuticals for cardiovascular and infectious diseases, cancer, and psychiatric disorders.

Dividend Yield: 4.03%

Investor takeaway: Its shares are down 3.3% this year and over the past 15 years, it has an average annual return of 4%. Analysts give its shares seven "buy" ratings, four "buy/holds," nine "holds," and one "sell," according to a survey of analysts by S&P. Those same analysts expect that it will earn $1.96 per share this year and it will decline by 1% to $1.94 in 2013.

3. World Fuel Services ( INT)

Company profile: World Fuel, with a market value of $3 billion, markets aviation and marine fuel services to airlines, international shipping companies and to the U.S. military.

Dividend Yield: 0.37%

Investor takeaway: Its shares are up 1.3% this year and have a 10-year, average annual return of 24%. Analysts give its shares three "buy" ratings, one "buy/holds," and two "holds," according to a survey of analysts by S&P. S&P, which has it rated "strong buy," says "we believe the company is well positioned to expand its market share in the land and aviation segments" and it is also now diversified into transporting crude oil from the oil shale drilling fields in North Dakota via railcars.

2. Berkshire Hathaway ( BRK.B)

Company profile: Berkshire, with a market value of $192 billion, is a holding company with a wide collection of subsidiaries including in insurance, finance, manufacturing, and retailing operations, along with railroads, utilities, and energy distributors.

Investor takeaway: Its shares are up 6.4% this year and have a 10-year, average annual return of 5.5%. Analysts give its shares two "buy/hold" ratings and one "hold," according to a survey of analysts by S&P. S&P, which has it rated "hold," says it thinks the shares are fairly valued on both a price/earnings and price/tangible book value basis.

1. International Business Machines ( IBM)

Company profile: IBM is one of the world's largest information-technology companies. Its product line includes system hardware, infrastructure software, outsourcing, and systems integration services. Customers tend to stick with Big Blue after spending on one of its systems, which means steady, recurring revenue.

Dividend Yield: 1.44%

Investor takeaway: Its shares are up 14% this year. Over the past 15 years, its average annual return is 13%. Analysts give its shares 10 "buy" ratings, four "buy/holds," and 16 "holds," according to a survey of analysts by S&P. Those same analysts expect it to earn $14.90 per share this year, and rise 10% to $16.44 next year.

>>To see these stocks in action, visit the 10 Longest-Held Stocks of Top-Rated Mutual Funds portfolio on Stockpickr.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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