Invest Like a Pro: Eaton Vance

Imitation is the sincerest form of flattery, right? Well, when you're learning a new skill, imitation can also be a great way to hone your craft.

If you're learning guitar, you might pick up a book of Jimi Hendrix's licks or download the chords to a couple of Bob Dylan's songs. So when you're trying to become a better investor, it only makes sense to take a peek at what the professional investors are up to.

For the Fools who don't have the time or inclination to pick individual stocks on their own, Shannon Zimmerman at the Fool's Champion Funds newsletter service has put together a buffet of mutual funds that have collectively outperformed their benchmarks by more than 11%. For the rest of us, we can tune in directly to what some of the major funds are holding.

You see, the SEC requires institutional investment managers who are in charge of $100 million or more to show their cards via quarterly 13-F filings. This week, I've dug in to pull up some of the moves that big-time investment manager Eaton Vance (NYSE:EV) has been making, and to make things even more interesting, I cross-referenced its stocks against the opinions of The Fool's CAPS community.

Below are three stocks that Eaton Vance bought more of between its March filing and June filing ...

... and three that the firm lightened its position on.

Now, before you jump to it and make any hasty moves, remember that we're looking at what Eaton Vance has done in retrospect. For all we know, since the last 13-F filing the firm has drastically changed its holdings in any or all of the above stocks. With that in mind, here are some thoughts on CVS Caremark to kick off further research.

Who really knows best?
An interesting aspect of the CAPS community is that individual investors can stack themselves up against some of the top names on Wall Street. On CAPS, we track the stock-picking performance of major investment banks such as JPMorgan and Bank of America, as well as services such as Zacks and market commentators such as Jim Cramer. While some Wall Street players, such as Bank of America, have proved their worthiness, others have shown far less prowess than even the average individual player.

One thing that's for sure is that even the top Wall Street players have trouble keeping pace with the very best individual players on CAPS. So when I see two major Wall Street firms, such as Eaton Vance and Morgan Stanley selling CVS, which the CAPS community has given five stars, I have to scratch my head.

Now, it's important to point out -- again -- that we're playing Monday morning quarterback here on adjustments that these firms made a few months ago. That said, CVS's shares have been notably strong this year and are up nearly 40% since bottoming out late in 2006. At the beginning of August, the company also reported strong earnings that beat analyst estimates by a penny.

One of CAPS' top players, Gtrinvestor, gave CVS a thumbs-up in early August and called it a "good company in a consolidating but growing ... industry." He also noted the stock's reasonable price-to-earnings and price-to-earnings to growth (PEG) ratios as well as the share buyback that the company is executing. He concluded his analysis by saying, "[with] all the uncertainty out there, what better investment than a place where people get the basics of health care."

So is the CAPS community too bullish on CVS? Or could Eaton Vance and Morgan Stanley learn a thing or two from the CAPS players? Hop on over to CAPS, and start interacting with the other 60,000-plus CAPS players. While you're weighing in on these stocks, you can also find out about more than 4,900 other stocks that have a rating on CAPS.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. Washington Mutual, Bank of America, and JPMorgan Chase are Income Investor newsletter recommendations. The Fool's disclosure policy invests like a pro but has been told that it plays ball like a girl.