Wall Street's Buy List

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Actions speak louder than words, as the old saying goes. So why does the media focus so much attention on what Wall Street says about companies, instead of what it does with them?

Luckily for Wall Street watchers, the Internet brings us MSN Money's list of which companies the institutions are buying. True, we should be as skeptical of Wall Street's actions as we are of its words. But when the 115,000-plus lay and professional investors on Motley Fool CAPS agree with Wall Street's opinions, it just might be time for some buying.

Here's the latest edition of Wall Street's Buy List, alongside our investors' opinions of the companies involved:

Stock	Recent Price	CAPS Rating (5 max):
Fairfax Financial (NYSE: FFH)	$313.50	***
JPMorgan Chase (NYSE: JPM)	$45.90	***
Comerica (NYSE: CMA)	$33.42	**
Associated Banc-Corp (Nasdaq: ASBC)	$21.88	**
FBR Capital Markets (Nasdaq: FBCM)	$5.97	*

Companies are selected from the "Institutional Ownership Up Last Month" list published on MSN Money on the Saturday following close of trading last week. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Buy what you know
I suppose it's logical that after the Great Bailout of '08 passed, the people first in line to dive back into banking stocks would be the Wall Street bankers themselves. Logical, yes -- but as the CAPS ratings displayed above show, it may not have been smart.

All five companies making this week's list of Wall Street faves are financials. But not one of the five enjoys positive sentiment on CAPS. The closest we come are three-star-rated Fairfax Financial and JPMorgan Chase. Of these two, JP has by far the larger following on CAPS.

So what the hey -- although I'd prefer to present to you a stock that CAPS members actually feel good about, we'll instead make do with what we have. Let's take a gander at ...

The bull case for JPMorgan Chase
CAPS All-Star chk999 keeps the bull thesis on this one short and sweet: "One of the few strong banks left. Many will die, but the survivors will prosper."

Short is good, but details are nice, too. y0zhik provides some:

JP Morgan is very well positioned for superior earnings growth. The acquisitions of [Bear Stearns] and [Washington Mutual] (assets of) did not yet have an effect on company's earnings -- but it will, in a big, positive way. [CEO and Chairman] Jamie Dimon proved time and again JP Morgan knows how to make a deal that benefits its shareholders -- buying assets of distressed companies in a severe crisis (read: at the lows). ... Additionally, the 700B 'taxpayer buy-in package' (aka 'bail-out package') will indirectly help all banks, but most notably JP Morgan and Bank of America (NYSE: BAC) -- although these banks are not likely to take the (quite severe) terms offered by the Treasury, the mere act of Treasury buying these 'toxic' assets will provide a 'floor' in the price of such assets.

And assertfalse predicts: "Once the current market shake up works itself through, JPM will be well positioned to take advantage of recent acquisitions."

That said, I have to tell you, folks -- I'm leery of touching anything financial these days. Yes, the worst of the carnage may be over. Or it may not be. Quite simply, I don't know. I don't know what's going to happen next to the financial system. I don't know what's "inside" any of these banks. And my worst fear is that I don't even know what I don't know!

I mean, sure, JP looks tempting at a price-to-book value of 1.4. On the other hand, we've had multiple opportunities to buy JP at similar valuations over the past five years. So if anyone tells you that today's price offers a "once-in-a-lifetime opportunity" -- don't believe 'em. The "B" in that P/B equation is only as good as JP's next charge-off.

Foolish takeaway
Despite all of my doubts and worries, if you think you absolutely, positively have to buy a big bank stock right now (though for the life of me, I can't imagine why you would feel so compelled), then yes: Along with B of A, and Citigroup (NYSE: C), JP does appear to be one of the few megabanks favored by the ambrosia-munching gods on Mount Fed-lympus. Its chances of surviving the crisis seem better than most.

Just don't say you weren't warned. You pays your money, and you takes more than the usual chances on this one.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about JPMorgan Chase -- or even what our CAPS members are saying. What we really want to know is what you think. So here's your chance. Head on over to Motley Fool CAPS, and tell us.

Motley Fool CAPS : It's fun, it's free, and it just might make you famous.