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?
At one point in time, the answer was easy: We didn't know what the bankers were up to -- but no longer. Thanks to the folks at finviz.com, it's now easy to keep tabs on what stocks financial institutions are buying and selling. And thanks to the 170,000-plus lay and professional investors on Motley Fool CAPS, we've also got insight into whether these decisions make sense.
Here's the latest edition of Wall Street's Buy List, alongside our investors' opinions of the companies involved:
(out of 5)
|Oilsands Quest (NYSE: BQI )
|Star Scientific (Nasdaq: CIGX )
|VirnetX Holding (NYSE: VHC )
|ZAGG Inc (Nasdaq: ZAGG )
|Hyperdynamics Corp. (NYSE: HDY )
Companies are selected from the "Institutional Ownership Up Last Month" list published on MSN Money after close of trading on Friday. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.
Wall Street vs. Main Street
Up on Wall Street, the professionals think these five stocks are the greatest things since sliced bread. (And by "bread," I mean money.) They're ...
- ... following Rodman & Renshaw's lead and buying into Hyperdynamics ...
- ... betting that Zagg will profit, now that Best Buy is hawking its "invisibleSHIELD" screen protectors ...
- ... puffing up shares of Star Scientific, in hopes an FDA application will help lift the tobacconist to ever-higher highs ...
- ... ignoring warning signs (that the Fool's own Seth Jayson recently uncovered), and buying VirnetX Holding with abandon.
Are these good ideas? It appears few Fools think so, as they assign lowly one-star ratings to most of the stocks on this week's list. They may be right. That Hyperdynamics recommendation, for example, comes from an analyst that, according to our research, ranks as one of Wall Street's Worst. Only a single stock on today's list attracts support from both Wall Street and Main Street. Which is it? That's what we'll look into today, as we examine ...
The bull case for Oilsands Quest
Oilsands Quest may sound like the name of a really bad video game, but in reality, the company is a play on the essential role of oil. CAPS member Ipscdvc sees oil "going nowhere but up longterm." And the higher the price goes, the more economically viable Canada's oil sands become as a source of crude.
CAPS member johndownes notes that Oilsands Quest's "inventory is proven, and the cost to obtain it is high … but as price of retail gas starts climbing toward $4, then $5, watch the urgency of oil sands precipitate, and the value of the company and its stock soar."
Will gas climb to $4 and $5 per gallon? Probably, eventually, yes. Even if it doesn't happen immediately, there's no rush. As CAPS member andrams, a confessed Oilsands bull, admits: "Production won't begin for 6-9 years, who cares, look for BQI to get driven up by those not interested in profitability."
But wait just one proverbial cotton-pickin' minute. Who cares about profitability? Um, me, for one. Oh, I know there are "investors" out there who love nothing more than rooting through piles of penny stocks in hopes of chancing across a buffalo nickel. As they might tell you: "Hey, if Oilsands Quest only goes to a dollar, you'll double your money!"
But the question you need to ask yourself is: Why do you think Oilsands Quest might go to a dollar? After all, the stock's already fallen 22% over the past year -- presumably for a reason. And call me crazy for suggesting this, call me a Fool, but it just might be that the reason Oilsands is currently stuck in a tar pit, is that it's not earning its keep.
Foolish final thought
Now mind you -- I'm not anti-oil sands, per se. Fact is, there are multiple companies making good money from this resource. Suncor Energy (NYSE: SU ) is one. Imperial Oil, a subsidiary of ExxonMobil (NYSE: XOM ) , is another. While I admit the possibility that Oilsands Quest will eventually turn into a third, profitable oil sands play, right now it's anything but.
And that's anything but a reason to own it.
Perhaps you disagree? If you think Oilsands Quest is a trip worth taking, then we've got a place to state your case. Tell us all about why you think Wall Street's right to be buying Oilsands Quest, and why I'm all wrong. Tell us on Motley Fool CAPS.