Tuesday's 5 Large-Cap Leaders

Each day, The Wall Street Journal publishes a list of large-cap winners. Here are Tuesday's best:

Our top gainer, broker State Street, jumped after reporting better-than-expected earnings. Interesting, but we Fools prefer buy-to-hold stock stories. Are any of our large-cap leaders worth owning over the next three to five years?

We know that railroad operator CSX could be. But none of the others gets the nod from the more than 70,000 professional and amateur investors in our Motley Fool CAPS database. Some even think State Street could be worth shorting.

Investor tenmiles writes:

State Street sponsors roughly $30 billion in ABCP conduits. The "equity" piece of these programs is very small -- let's say 2% of the deal. The bank doesn't hold any of this. As State Street doesn't have a traditional bank depositor base, however, if they are forced to unwind these programs at even 95 cents on the dollar, they would lose 3% on their total program exposure -- [a] $1 billion hit -- [a] big number for a firm even of their size. Sell here.

All-Star ThatGuy73 adds:

The fear -- some of it no doubt fanned by hedge funds -- is that these [State Street] conduits' portfolios, full of credit card, auto, and mortgage loans the bank uses as collateral for selling commercial paper to investors, have undisclosed losses. If spooked buyers were to balk at buying more commercial paper, State Street might have to provide some funding. Obviously, $29 billion is a big exposure relative to the bank's total capital of $113 billion.

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See you back here tomorrow for more of the best of the biggest.

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