What You Were Selling Last Week: Vodafone Group

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LONDON -- One of Warren Buffett's famous investing sayings is "be fearful when others are greedy and greedy when others are fearful" -- or, in other words, sell when others are buying and buy when they're selling.

But we might expect Foolish investors to know that, and looking at what Fools have been selling recently might well provide us with some ideas for investments that are past their prime

So, in this series of articles, we're going to look at what customers of The Motley Fool ShareDealing Service have been selling in the past week or so, and what might have made them decide to do so.

Six-month high
Less than a month ago, Vodafone (LSE: VOD  ) (NASDAQ: VOD  ) was at the No. 1 spot in the "Top Ten Buys" list* -- so what's happened to put it at the top of the "Sells" list?

Well, for one thing, its share price hit a six-month high last week, reaching almost 188 pence during March 11, a level not seen since August last year. After the company's somewhat roller-coaster progress since then -- it dipped as low as 154 pence at the end of 2012 -- people may have felt inclined to take some profits.

They may also have started having some concerns about Vodafone's future. The surge in Vodafone's price last week came on the back of strong rumors that U.S. telecom leader Verizon Communications was considering the future of its relationship with the UK..-based telecom giant. Perhaps Verizon will buy Vodafone out of its 45% share of Verizon Wireless -- currently estimated to be worth around $115 billion (77 billion pounds) -- or else there might be a merger which, if it happened, would be the biggest in corporate history. (In reality, Verizon would effectively buy Vodafone, but it'd be called a "merger" to keep everyone happy.)

While selling its stake in Verizon Wireless would give Vodafone a considerable lump sum to play with, it would also mean the loss of a generous cash-cow -- Verizon Wireless generated a dividend of over $3.8 billion (2.5 billion pounds) for Vodafone at the end of 2012, and $4.5 billion (3 billion pounds) the year before.

And any potential merger would not be without considerable attendant risks. Large corporate mergers and acquisitions have a habit of being deeply disappointing, if not deadly -- think AOL/Time Warner, HP/Compaq or (and also in the telecoms industry) Sprint/Nextel -- with more failing to achieve their financial goals than succeeding. Any short-term gain in Vodafone's value generated by the excitement of impending nuptials could easily be more than wiped out in the long-term by a failed marriage.

So perhaps some people decided to take some profit now from Vodafone's improved share price, on the back of the initial rumors, and then wait and see what happens.

A high-quality income share
Many people will have bought Vodafone for its dividend, currently 5.2%. Here at the Fool, our analysts have been focused on finding The Motley Fool's Top Income Share For 2013 for our readers and they've found a top-quality company that's paying a 5.6% dividend, which is named in our latest report.

It's completely free of charge, but like all special reports from TMF it will only be available for a limited period, so click here to get your copy now!

*Based on aggregate data from The Motley Fool ShareDealing Service.


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