Although investors in the U.S. stock market this year may feel they’re riding a roller coaster, stocks were up by about 12% as of Nov. 19, Susan Dziubinski, a Morningstar investment specialist, wrote in a blog post last week.
Year to date as of Wednesday, Morningstar's U.S. market index is up nearly 16%.
Dziubinski aimed her post toward investors who would like to prune their portfolios by selling stocks, listing those that some of the best fund managers — the “smart money” — have been unloading in recent months.
To find out what these managers have been selling, analysts isolated the top stock investors among current active fund managers, screening for funds in Morningstar’s U.S. large-value, large-blend or large-growth categories; funds with at least one share class earning the firm’s medalist ratings of gold, silver or bronze with 100% analyst coverage; and funds that held 50 or fewer stocks as of their most recently reported portfolios.
Twenty-nine separate fund portfolios passed the screen. Analysts then compared the latest portfolios of these funds with their portfolios three months before to determine which stocks these managers had been selling.
Dziubinski warned investors not to take her list as a comprehensive one of stocks to sell. For one thing, many of these stocks remain sizable holdings among the best managers; trimming a stock position isn’t the same as bailing out of a name entirely.
Moreover, although some of the stocks on her list look overvalued according to Morningstar analysts, others are fairly valued or even undervalued. And finally, selling stocks can have tax implications, and tax circumstances differ from investor to investor.
See the gallery for 10 stocks the smart money has been selling in recent months, according to Morningstar. Year-to-date performance is as of Nov. 28.
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