LONDON -- This morning, pharmaceutical giant GlaxoSmithKline (LSE: GSK.L ) was the fourth-most popular purchase by stockbroker TD Direct Investing's individual clients between the market's opening and noon.
Why? A 2% drop in the share price gives a clue: Institutional investors have been selling, it turns out. Consequently, private buyers have been stepping in this morning to grab a piece of this high-yielding drugs-to-toothpaste global business that handily pays its dividends quarterly, and which is presently offering a prospective yield of 5.2% on a forecast P/E of 12.
And the reason for the institutional sell-off? A downgrade by Morgan Stanley, it seems, which expressed a preference for AstraZeneca, citing concerns over margins.
The fifth- and sixth-most popular picks this morning by the private clients of the stockbroker are two companies bracketed together in a merger play -- respectively, Xstrata (LSE: XTA.L ) and Glencore (LSE: GLEN.L ) .
The reason? There's been overnight news regarding the proposed terms of the deal, which has been stalled by sovereign wealth fund Qatar Holding, 12% owner of Xstrata. A Glencore shareholders' meeting to discuss the deal has been canceled, and the offered price for each Xstrata share has been raised from 2.8 Glencore shares to 3.05 shares.
Sensing a bargain, private investors have piled in. Will they be disappointed? Time will tell.
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