Strategist Jeff Saut Cautious, But Likes Certain Dividend Stocks

It's been a while since we've checked in on what market strategist Jeff Saut has had to say. Given the drastic run up in equities this year, Saut is cautious. Yet while he's cautious, he doesn't want to bet on the downside.

This is because he thinks there's a likelihood the market could just as well see a sideways consolidation. In general, Saut has long believed it's imprudent to be bearish because a turn in the economy would translate into profits exploding, inventory rebuilding, and a capital expenditure cycle, topped off with a reduction in unemployment.

Lack of Down Days in the Market

Saut is most intrigued by the fact that the market has been able to jump over a ton of hurdles (a 21% rise in the price of gas being one of them).

He writes, "the SPX has now gone 35 trading sessions in 2012 without suffering a 1% down day. There have been 12 other years since 1928 where the SPX has traded higher for 30 sessions, or more, without a 1% down day. In all but one of those occurrences the SPX was higher at year's end with a median gain of more than 15%."

Dividend Stocks Saut Likes

So while he does think this bodes well for the market, he is still a bit cautious in the near-term as the market's recent rise has felt "unnatural" to him. As such, he has recommended the following conservative dividend stocks: Abbott Labs (ABT), Aflac (AFL), Chevron (CVX), McDonald's (MCD), Norfolk Southern (NSC), and Huntington Bancshares (HBAN).

Embedded below is Jeff Saut's recent commentary:



You can download a .pdf copy here.

For more recent market commentary, yesterday we posted up Eric Sprott's February commentary on why 2012 is the year of the Central Bank, as well as Passport Capital's John Burbank saying this is a stockpicker's market.

Strategist Saut Thinks Trading Bottom Is Near

Jeff Saut is out with his latest investment strategy comments, emphatically titled, "Ouch." This of course refers to the precipitous decline in markets as of late. He writes, that, "My risk management discipline forced me to raise more cash again on Friday, even though I believe the stock market is in the process of making a significant 'low.' "

We've covered Saut's risk management principles before and while those principles caused him to raise cash levels last week, he's confident that markets are now oversold.

He cites the great folks at Bespoke who said that "61.4% of the SPX's stocks are oversold. The current oversold level is only the 27th time since 1990 that more than 60% of stocks in the index have been [this] oversold."

At this point, Saut believes you should 'keep your head screwed-on straight' and start compiling your buy list. In addition to some of Saut's favorite stocks, he recently added Abbott Labs (ABT), Copa Holdings (CPA), Digital Realty Trust (DLR) and Norfolk Southern (NSC) as solid candidates.

Embedded below is Jeff Saut's latest market commentary where he talks about an impending trading bottom in stocks drawing near:



You can download a .pdf copy here.

Warren Buffett To Sell Union Pacific & Norfolk Southern Stakes (UNP & NSC)

Following Warren Buffett & Berkshire Hathaway's announcement of their Burlington Northern (BNI) purchase, we now see that he is set to make another round of moves in the railroad industry. As of last portfolio disclosures, Buffett owned shares in Burlington Northern, Union Pacific, and Norfolk Southern. Upon his impending acquisition of BNI, we now see that Berkshire Hathaway will sell their entire remaining 9.5 million shares of Union Pacific, a 2% stake in the company. Additionally, they will also sell their entire Norfolk Southern position of 1.9 million shares (or 1% of the company).

They will liquidate these positions between now and the impending transaction date for their BNI purchase as the news was revealed recently by Matthew K. Rose, chief executive of Burlington Northern. Buffett already owns 22.6% of BNI and will purchase the rest of the shares for $100 per share in cash and stock. In terms of other recent activity out of Buffett, we also saw that he has yet again sold shares of Moody's (MCO), his third sale this year. For more resources on Warren Buffett, check out Warren Buffet's recommended reading list, as well as the top 25 Warren Buffett quotes. Stay tuned next week as new disclosures (form 13F) will be filed with the SEC and we will update Berkshire's other portfolio activity.