With a market cap north of $160 billion, it's no surprise that Google (Nasdaq: GOOG ) attracts a lot of institutional and retail investor interest. It's also the No. 26 most-owned stock by investment clubs, as measured in April by the folks at Better Investing. For companies with such high levels of retail investor interest, I like to run through an exercise that looks at six measures of overall consensus sentiment.
Turns out, the view of Google is mostly bullish. Here's a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts like Google. Data from S&P Capital IQ captures their collective feeling:
|Opinion||Number of Analysts|
Thirty-two analysts have either a "buy" rating or an "outperform" on the stock. Another five rate it a "hold," but none give it an "underperform" or "sell." For purposes of our exercise, it's fair to say that analyst sentiment is bullish.
2. Insider buying
Next we'll look at insider buying and selling. Over the past year, Google insiders have sold $1.54 billion worth of their company stock. During the same time period, insiders didn't buy a single share. (Data from Form4Oracle.)
Insiders sell stock for a whole host of reasons -- to pay for a house or tuition, to diversify assets, and so forth. Still, insiders have dumped more than a billion dollars' worth of shares without buying even one, so we'll classify insider as bearish.
3. Guru buying
Next, we'll look at "guru" ownership of the stock, according to GuruFocus.
In the quarter ended June 30, 16 gurus traded Google -- 13 buyers and three sellers. The buyers included David Tepper, David Winters, and Wally Weitz; George Soros and Leon Cooperman were among the sellers.
With the majority in the "buy" camp, we'll classify guru sentiment as bullish.
4. Retail investor community sentiment
For retail investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock-rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. Google has a mostly bullish four-star rating.
Next we'll look at whether short-sellers are circling the stock. There are 5.8 million Google shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 1.8%, which is fairly low. For determining sentiment, we'll classify the low short interest as bullish.
6. Does Buffett own it?
This is the "cherry on top" test, and in this case, it's a no: Berkshire Hathaway doesn't own shares of Google. Although Warren Buffett and Charlie Munger have praised Google's incredible moat, the famous technophobes haven't added it to their Berkshire equity holdings.
Adding it up
The consensus opinion on Google is mostly bullish. Analysts, gurus, and the CAPS community like the stock, and in another bullish sign, short sellers are staying away. But Google insiders have dumped a whole lot of shares in the past 12 months, without a single open-market purchase. The company also fails our cherry-on-top test -- Berkshire ownership.
Of course, you can't base an investment decision on who likes or dislikes the stock you own, and even a consensus bullish opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Google. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Google's movements, and for more analysis on the company, make sure you add it to your Watchlist.