PNC Financial Services Group, Inc. (PNC) is a diversified financial services company based in the United States. PNC manages over $250 billion in assets, of which approximately $38 billion is deployed in equities.
I discussed PNC Financial Services' Top Buys in a previous article. In addition to buys, it is also interesting to have a look at the top stocks where PNC is booking profit and selling its holdings. The following list is PNC's top sells in the December quarter, according to its most recent 13F filing with SEC.
Stock | Symbol | Shares Held as on 09/30/2011 | Shares Held as on 12/31/2011 | Change in shares |
Procter & Gamble Co. | (PG) | 14,473,275 | 14,295,633 | -177,642 |
Apache Corp. | (APA) | 743,312 | 602,522 | -140,790 |
Apple Inc. | (AAPL) | 1,181,120 | 1,142,108 | -39,012 |
International Business Machines | (IBM) | 3,595,378 | 3,503,702 | -91,676 |
Exxon Mobil Corp. | (XOM) | 18,761,160 | 18,519,451 | -241,709 |
PPG Industries, Inc. | (PPG) | 1,688,117 | 1,368,088 | -320,029 |
Tiffany & Co. | (TIF) | 743,017 | 276,653 | -466,364 |
Baker Hughes Inc. | (BHI) | 1,036,181 | 224,337 | -811,844 |
Source: 13F Filing
I believe Proctor & Gamble (PG), Exxon Mobil (XOM) and Baker Hughes (BHI) are good short candidates among above stocks. However, one stock where I don't agree with PNC, and believe it is a buy instead of sell, is Apple (AAPL).
Procter and Gamble is a worldwide manufacturer and marketer of consumer and personal care products. Its well known brands include Pampers, Gillette, Pantene, Duracell, Clairol, Charmin and Bounty. It largely is a mature market player, with only 30% of revenues coming from emerging markets.
Recently, P&G reported disappointing FYQ2 results and lowered its 2012 guidance. With its business heavily levered towards developed markets, I expect P&G will continue to struggle with top line growth as consumer spending weakens. P&G is losing its market share in mature markets, and it needs more innovation in its products to drive the growth. Even in emerging markets, I believe that margins will be under pressure, due to investment spending, along with Forex headwinds.
With the macro headwinds in the form of input costs and currency drags, and continued softening of developed market growth rates, I don't like risk-reward profile of P&G, and expect a near term downside.
Baker Hughes Incorporated supplies wellbore-related products, and technology services and systems for drilling, formation evaluation, completion and production, and reservoir technology and consulting to the oil and natural gas industry worldwide. It also provides products and services to the downstream refining and process and pipeline industries.
BHI recently reported Q4 earnings which missed consensus. BHI's NA operations were effected by poor logistics, hampering the company's ability to run its fracturing fleets efficiently, and thus, driving the margins lower. Further, availability, cost and transportation issues are expected to continue through 2012. Although international business performed largely as expected, going forward, it can also face pricing pressures.
With almost flat rig count, pricing pressures in natural gas basins and operational headwinds in 1H 2012, I see little upside for BHI near term and recommend booking profits now.
Exxon Mobil Corporation is an American multinational oil and gas company. It is the world's largest publicly traded oil company. It engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas and petroleum products.
Exxon reported disappointing Q4 results, with an EPS well below the consensus estimates, after accounting for the one time asset sale gain. Production fell by 9% y-y, and upstream revenues missed the market expectations due to disappointing volumes. Even downstream and chemicals businesses reported earnings below expectations.
Exxon is the world's largest gas producer. Despite a bleak natural gas outlook in the U.S, XOM continues to be bullish on natural gas demand, as is evident from its production increase in Q4 2011 and also by its most recent acquisition of XTO Energy, a natural gas company. At a time when its competitors Chesapeake and Conoco-Phillips have announced natural gas drilling cuts, XOM has continued to look for growth in natural gas production. While this move clearly points to their approach towards developing a long term resource, it is expected to affect the near term earnings potential. Given the fact that XOM trades at a premium to its peers and near term headwinds, I expect its stock to see a correction in the near term.
Apple Inc. looks good, trading at 10x forward earnings despite ~$100 billion in cash and expected 43% growth in sales in the current year. Apple recently posted good December quarter results, beating even the most optimistic estimates. Its guidance was also above street estimates. Apple continues to remain a secular growth and market-share-gain story in the smartphone and tablet space. I would recommend buying the company's shares, given its low valuations and several upcoming catalysts over the next few quarters, such as strong iPhone 4S sell-through and anticipated iPad 3 and iPhone 5 launches this year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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