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Investing Specialists

Our Ultimate Stock-Pickers' Top 10 New Money Purchases

We've found solid 5-star stocks in the new money purchases of our top managers.

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By Greggory Warren, CFA | Senior Stock Analyst

Given that we had so little luck finding truly investable ideas in the top holdings, purchases and sales of our Ultimate Stock-Pickers, we decided to take a much deeper look at the new money purchases made by our managers during the most recent period. As you may recall, we believe that portfolio managers send signals about how they feel about a particular stock by the amount of money they're willing to commit to it at any given time, which is why we focus on both purchases and sales by our Ultimate Stock-Pickers. As much as we assess the relative attractiveness of an individual security by how many funds hold it, whether or not their managers have been adding to or subtracting from their positions, and the percentage each security makes up of a portfolio, we also like to look at new money purchases and outright sales, which we feel offer additional insight into the thinking of managers about their holdings.

Looking at all of the new money purchases made by our Ultimate Stock-Pickers during the third quarter, the largest amount of capital was being dedicated to securities in the financial services sector, followed by commitments in industrial materials, health care, telecommunications and consumer goods. Within financial services, the two largest purchases were made in shares of  Berkshire Hathaway (BRK.A)(BRK.B), which Bruce Berkowitz has been buying for his  Fairholme (FAIRX) fund, and  Royal Bank of Canada (RY), which  Parnassus Equity Income (PRBLX) made a significant purchase in during the third quarter. Meanwhile in the industrial materials sector,  Republic Services (RSG),  Precision Castparts (PCP),  3M (MMM), and  Allegheny Technologies (ATI) saw the greatest amount of new money committed to them. As you may recall, both  Oak Value (OAKVX) fund and Berkshire Hathaway took meaningful stakes in Republic Services, while  Oakmark Equity & Income (OAKBX) and  Sequoia (SEQUX) were both making conviction purchases in Precision Castparts.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.