VALUE INVESTING: Ultimate Stock Pickers' Buys & Sells (XOM, MSFT, AIG, GS, BRK.B, MA, GE, CMCSA, UNH, OXY, JNJ, PFE)

The Morningstar Ultimate Stock-Pickers Team is featured in an article by Greggory Warren today has many top buys and sells that should be of interest to value investors.  This stock picker team includes some key investing individuals such as Bruce Berkowitz, Warren Buffett, William Browne, Clyde McGregor, Donald Yacktman and more. Some of the surprising value investor share names on the list trading at deep discounts to peers and to Morningstar’s implied fair value were ExxonMobil Corporation (NYSE: XOM), Microsoft Corporation (NASDAQ: MSFT), American International Group (NYSE: AIG), Goldman Sachs Group Inc. (NYSE: GS), Berkshire Hathaway Inc. (NYSE: BRK.B), MasterCard Incorporated (NYSE: MA), General Electric Company (NYSE: GE), Comcast Corporation (NASDAQ: CMCSK), and UnitedHealth Group Inc. (NYSE: UNH).

What is more important than what stocks were bought and sold are the key discounts to fair value.  That is what value investors are looking for more than they are for riding every coat tail of every billionaire fund manager.

The Ultimate Stock-Pickers’ top purchases that are at discounts to the implied fair value were as follows:

• Occidental Petroleum (NYSE: OXY) at 0.85-times fair value
• ExxonMobil Corporation (NYSE: XOM) at 0.70-times fair value
• Microsoft Corporation (NASDAQ: MSFT) at 0.75-times fair value
• American International Group (NYSE: AIG) at 0.90-times fair value
• Goldman Sachs Group Inc. (NYSE: GS) at 0.78-times fair value
• Berkshire Hathaway Inc. (NYSE: BRK.B) at 0.90-times fair value
• MasterCard Incorporated (NYSE: MA) at 0.88-times fair value
• Johnson & Johnson (NYSE: JNJ) at 0.73-times fair value
• Pfizer Inc. (NYSE: PFE) at 0.63-times fair value

There were also some top sells from the Ultimate Stock Pickers, but Morningstar has some incredible discounts worth noting to their implied fair value.  These picks here have a discount at 0.75-times fair value and the list is as follows:

• General Electric Company (NYSE: GE) at 0.61-times fair value
• Comcast Corporation (NASDAQ: CMCSK) at 0.74-times fair value
• UnitedHealth Group Inc. (NYSE: UNH) at 0.66-times fair value

Again, we are looking for value names for a harder market than what we saw from February of 2009 to April of 2010.  Value investors look for names that are already trading at discounts to fair value.  The Morningstar investment manager roster for the Ultimate Stock Pickers can be found here.

JON C. OGG