LRCX makes Merrill's Run is Done list...
Merrill Lynch publishes ‘run is done' list
ROMA LUCIW
Wednesday, January 03, 2007
Investors making New Year's resolutions to shed holiday pounds and quit smoking should consider adding a shuffle of their U.S. portfolio to the list, according to Merrill Lynch & Co. Inc.
To help with that task, Merrill Lynch quantitative strategist Savita Subramanian identified 17 stocks that had a stellar run last year, but are at risk of underperforming early in 2007.
One reason behind the potential pullback is the reversal of “window dressing,” the practise of mutual fund and portfolio managers buying winning stocks at the end of the quarter or year to make their holdings appear better, Ms. Subramanian said. The second is the notion that investment managers may wait until January to offload best-performing stocks to avoid short-term capital gains.
Merrill Lynch compiled the “run is done” list by picking stocks that had performed at least twice as well as their respective sector in the S&P 1500 from Dec. 2005 to Dec. 2006. The stocks needed to have fundamental outlooks which did not appear to offset a potential seasonal sell-off, meaning Merrill Lynch research analysts had it rated a “neutral” or “sell.”
Each of the 17 stocks in the Merrill “run is done” basket was equal-weighted as of late December, had a minimum three-month average notional volume of $20-million (U.S.), and supported a trade size of $35-million that did not exceed more than 10 per cent of a stocks' average daily volume. The 17 stocks were all listed on the S&P 500, mid-cap or small cap indexes.
In the consumer discretionary space, DirectTV Group Inc., General Motors Corp., Gymboree Corp., and Kohl's Corp. made Merrill's list. Safeway Inc. was the sole consumer staple company, Boston Properties Inc. the only financial and Applied Biosystems Group the lone health care firm.
Among industrials, AGCO Corp., Allied Waste Industries Inc., Deere & Co., Lockheed Martin Corp., Paccar Inc., and Terex Corp. made the list while Lam Research Corp., Mentor Graphics Corp., Synopsis Inc. and ValueClick Inc. were the tech additions.
Investors can track the performance of the Merrill “run is done” basket under the Bloomberg ticker MLRD1. |
