Momentum investors are stock players who get behind companies that have the wind in their sails. Contrarian investors typically pick up the cigar butts the market has tossed aside. So what do you call investors who turn against winners? Sourpusses? Shorts?
Over on Motley Fool CAPS, we sometimes call them the savviest investors around. Not only does the 75,000-strong investor-intelligence community rate thousands of stocks every day, but the players themselves get rated, too. The best of the lot -- what CAPS calls All-Stars -- consistently outperform their peers over time and are assigned ratings of 80 or greater.
When an All-Star player sours on a top-rated stock, perhaps we should take notice. Perhaps the player's found a chink in that highflier's armor, or a question mark in its financial footnotes. Or maybe it's just a hunch. That's why these tables aren't lists of stocks to buy or sell -- just starting points for further research.
Here's a list of stocks that some All-Stars have recently given the thumbs-down to:
|
Company |
CAPS Rating |
1-Year Return |
CAPS All-Star |
Player Rating |
|---|---|---|---|---|
|
Berkshire
Hathaway |
***** |
27.8% |
dwot |
99.96 |
|
Valero Energy |
***** |
25.8% |
SteveInChicago |
99.12 |
|
Altria |
***** |
20.6% |
MaskedMan2007 |
94.01 |
|
Yamana Gold |
***** |
19.7% |
bridgeboy0 |
98.60 |
|
Vaalco Energy |
***** |
(41.7%) |
MRTShorts |
98.14 |
More than 10,700 investors have rated these stocks, with an average 97% of them being bullish on their prospects. 98% of All-Stars also think they'll outperform the market. So what might have turned some of CAPS' top players against these otherwise widely admired companies?
A weekend in the Berkshires
With its breadth of industries owned, stability of management, and outsized performance over the years, shares of Berkshire Hathaway have been compared to a mutual fund. The holding company of Warren Buffett and Charlie Munger has long been admired, but both men are pretty long in the tooth. Doubts about Berkshire's ability to continue to beat the market -- as well as what will happen when these two investing icons pass the torch -- trouble some CAPS players, like All-Star HoweirdRoark:
Great company, excellent long-term play...my kind of stock. BUT I don't think that BRK will outperform the S&P, and I'm worried about management and it's direction once the Oracle of Omaha decides to step down.
That's the thinking of another All-Star, FloodFinancial, who's performed better than 98% of all CAPS players:
Berkshire has the potential to plummet during the transition of managers. Even if this doesn't happen, whats the upside? a 2-3 point outdual of the S&P, you can't even lock-in that as accuracy points in CAPS. The current score leaders are going short, I'm going w/ them.
Whatever the future holds for Berkshire Hathaway after Buffett and Munger are gone, many CAPS investors feel they'll take the same care in choosing a successor that they have taken in choosing winning stocks. So that becomes a non-issue for some. Amongst the CAPS bulls, including dbhealy with a 99.64 player rating, there's the feeling that the current market malaise will give Berkshire the opportunity to add more beaten-down, quality companies:
When the market is down, the Oracle of Omaha always manages to find a bargain. The recent downturn has presented some unbelievable opportunities to get in cheap on fundamentally sound companies. No doubt Buffett and Munger have been anticipating this for awhile, and won't miss the boat!!
Make lemonade from lemons
We know both sides here, but Motley Fool CAPS is more than what some pros think, even if they're All-Stars. It's where we invite you to share your thoughts and insights and add your voice to the debate. Go ahead, have your say. We're eagerly waiting!
