Fund managers overseeing millions -- or billions -- of dollars worth of assets at the top funds don't get to where they are by accident. These are investors who know how to pick apart a business, find companies that are going to excel, and buy stocks at reasonable prices.
For the Fools that don't have the time or inclination to pick individual stocks on their own, Amanda Kish at The Fool's Champion Funds newsletter has put together a buffet of sharp managers that have collectively outperformed their benchmarks by over 11%.
The rest of us, though, can tune in directly to what some of the major funds are holding.
You see, the SEC requires institutional investment managers who manage $100 million or more to show their cards via quarterly 13F filings. This week I'm looking at the holdings of Evergreen Investment Management -- the asset management arm of Wachovia (NYSE: WB ) , that has over $280 billion in assets under management. I've dug in to see what kind of moves Evergreen 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 companies that Evergreen bought more of between its June filing and September filing ...
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Companies
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Percentage Change in Evergreen Position
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Current Market Value of Evergreen Position
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CAPS Rating
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Sun Microsystems (Nasdaq: JAVA )
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303%
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$49.4 million
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***
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Electronic Arts (Nasdaq: ERTS )
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173%
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$36.8 million
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***
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NVIDIA (Nasdaq: NVDA )
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56%
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$47.6 million
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*****
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Source: CapitalIQ, Yahoo! Finance, and CAPS as of Dec. 17.
... and three that the firm lightened its position on.
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Companies
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Percentage Change in Evergreen Position
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Current Market Value of Evergreen Position
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CAPS Rating
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Chipotle Mexican Grill (NYSE: CMG )
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(41%)
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$14.6 million
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***
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Caterpillar (NYSE: CAT )
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(34%)
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$82.0 million
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****
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Capital One Financial (NYSE: COF )
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(34%)
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$24.3 million
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**
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Source: CapitalIQ, Yahoo! Finance, and CAPS as of Dec. 17.
Now before you jump to it and make any hasty moves, remember that we're looking at what Evergreen has done in retrospect. For all we know, the firm has drastically changed its holdings in any or all of the above stocks since the last 13F filing. With that in mind, here are some further thoughts on these moves.
Too spicy for the times?
When the market gets choppy, a common theme is for investors to diversify away from faster-moving, more volatile stocks with higher valuations. This could very well be the reason that Evergreen cut its stake in Chipotle by more than 40%.
Chipotle has been a big winner for investors, including subscribers of Motley Fool Hidden Gems and Rule Breakers (though Hidden Gems recommended Chipotle's "B" shares). The big run -- including over 150% in the past 12 months alone -- has jacked up the stock's valuation, though, and the stock trades at over 60 times its expected 2007 earnings and at 50 times its expected 2008 earnings.
Like a baseball slugger on steroids, many investors deem Chipotle's bulked up valuation to be a bit of a hazard. On CAPS there are still over 1,300 players who think the stock will outperform the market, but there is a growing chorus that thinks the stock's price has set the bar too high.
CAPS player levantian commented that Chipotle is a "great restaurant and concept, but the valuation is obscene." CAPS All-Star Jstegma added that "the stock is simply overpriced" noting that the company has "been benefitting from its newness, novelty, and trendiness, but eventually that will wear off ... [and] it certainly won't be growing at a rate that justifies the sky-high price of the stock."
So are you with Evergreen and the bears in the CAPS community? Or do you have other ideas? Hop on over to CAPS and start interacting with the other 77,000-plus CAPS players. While you're weighing in on these stocks, you can also find out more about over 5,300 other stocks that are currently rated on CAPS.
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