McDonald's

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It's sort of strange that institutions are selling off McDonald's ( MCD) right now. After all, the firm has earned its stripes as a stellar defensive name that actually managed to grow during the recession of 2008, and pays a cash dividend that currently clocks in at a 3% yield.

Still, institutions unloaded more than 14 million shares of McDonald's in the last quarter -- a small chunk of their total stake in the firm, but still one of only a few stocks that saw selling from their portfolios in the quarter. All told, institutional holdings in MCD dropped by $2.9 billion in the first quarter of 2012.

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McDonald's is the standard bearer in the fast food business, with more than 33,500 restaurant locations spread across 119 countries. The vast majority of those locations are franchised, part of MCD's unique strategy toward growing its footprint. You see, in many cases, the firm owns the properties that franchised restaurants are located on, giving the company greater income from each location than other restaurant franchisors receive.

Because McDonald's own team effectively picks the locations for its franchised locations by buying the land, the firm is able to put new locales through analysis and rigor that small franchisors can't. As a result, McDonald's boasts average store stales of $2.7 million, well above the industry average.

Selling off McDonald's shares may just be an example of gain-taking among portfolio managers, but in this environment, MCD's business should be selling at a premium, not at a discount. Statistically, with less than half the risk of the S&P, I still think McDonald's is a good pick for investors who want to get defensive with their portfolios...

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