Helping the Clintons sell their stock

Posted Jun 15th 2007 10:45AM by Peter Cohan
Filed under: Microsoft (MSFT), Cisco Systems (CSCO), General Electric (GE), Time Warner (TWX), Home Depot (HD), Walt Disney (DIS), Merrill Lynch (MER)

Bill and Hillary Clinton are liquidating their stock portfolio, , according to the New York Times. Of their eight biggest holdings -- you might consider bidding for two: Time Warner, Inc. (NYSE: TWX) and The Home Depot Inc. (NYSE: HD).

The reason for their decision to sell the stocks is to avoid a conflict of interest. This spring, a government directive also ordered her, as a presidential candidate, to dissolve her blind trust and disclose all of her assets to the public. The move will cost the couple "substantial amounts" in capital gains taxes and force them to forgo the potentially higher returns from these stocks.

But do these stocks really have that much potential? I don't know since I can't predict the future. Of the eight stocks of which the Clintons own between $250,001 and $500,000, I think they should be happy to sell one, I am on the fence about five and you should consider buying shares of two. Which are which?

CONSIDER

Time Warner. PEG 1.0 -- based on a P/E of 16.4 and earnings growth 15.7% to $1.15 in 2008
Home Depot. PEG 1.2 -- based on a P/E of 14.5 and earnings growth 12.2% to $2.91 in 2008
Merrill Lynch & Co., Inc. (NYSE: MER). PEG 1.3 -- based on a P/E 9.5 and earnings growth 7.3% to $8.94 in 2008

ON THE FENCE

General Electric Co. (NYSE: GE). PEG 1.4 -- based on a P/E of 18.5 and earnings growth 12.9% to $2.50 in 2008
Walt Disney Company (NYSE: DIS). PEG 1.4 -- based on a P/E of 15.8 and earnings growth 11.2% to $2.08 in 2008
Cisco Systems, Inc. (NASDAQ: CSCO). PEG 1.4 -- based on a P/E 23.8 and earnings growth 17.2% to $1.43 in 2008
Microsoft Corp. (NASDAQ: MSFT). PEG 1.5 -- based on a P/E of 21.9 and earnings growth 14.6% to $1.71 in 2008

AVOID

Biogen Idec Inc. (NASDAQ: BIIB). PEG 5.4 -- based on a P/E of 78.4 and earnings growth 14.4% to $2.86 in 2008

I wouldn't invest or avoid a company's stock based on PEG alone, but it's a good filter for further analysis. Meanwhile, it seems to me that the Clintons are picking a fortunate time to dump these shares.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns shares of GE and has no financial interest in the other securities mentioned in this post.

Tags: bill clinton, BillClinton, clintons, csco, dis, ge, hd, hilary clinton, HilaryClinton, mer, msft, twx