The Stocks the Funds Are Buying

We all know who's on Wall Street's Wish List. What I want to know -- and I'm guessing you do, too -- is who's doing the wishing. Which funds are buying the week's top stocks in our Motley Fool CAPS investor-intelligence database?

Here's our latest group of contenders.

Company

Currently Fetching

CAPS Rating (Out of 5)

Hyperdynamics

$2.99

**

Stride Rite

$20.21

**

CKX

$14.23

*

Hoku Scientific

$9.30

*

Integrated Electrical Services

$31.50

*

Exeter Resource

$3.04

Not rated

Everlast Worldwide

$25.92

Not rated

Sources: Motley Fool CAPS, Yahoo! Finance.

Only one fund is buying west African oil and gas explorer Hyperdynamics, the list topper, so we move on to cobbler Stride Rite, which has plenty of fans among the funds, including:

  • Allegiant Multi-Factor Small Cap Value I (AMRIX), an institutional fund that hasn't had a winning season since 2004 and is losing to the S&P again in 2007.
  • Forward Hoover Small Cap Equity (FFSCX), a no-load fund that flips its portfolio at least twice annually but has beaten the Russell 2000 since 1998.
  • Laudus Rosenberg U.S. Small Cap Instl (USCIX), a long-term market-beater that charges a meager 1.04% expense ratio. Unfortunately, it's closed to new investors.
  • MassMutual Select Small Cap Growth Equity (MSGSX), which is also a long-term market-beater -- it's up 3.82% per year on the S&P since 2002. Trouble is, the fund may also charge a 5.24% load. Yuck.

Of these funds, it's Forward Hoover Small Cap Equity that interests me most. Here are its top five stock positions.

Company

Currently Fetching

CAPS Rating

ADC Telecom (NASDAQ:ADCT)

$19.01

**

Longs Drug Stores (NYSE:LDG)

$53.00

***

Andrew (NASDAQ:ANDW)

$13.06

**

Quanex (NYSE:NX)

$49.40

*****

Dresser-Rand Group (NYSE:DRC)

$38.01

***

Sources: Morningstar, Motley Fool CAPS.

I'm intrigued by this portfolio in general and by steelmaker Quanex in particular. CAPS All-Star 80brown says the stock trades for 76% of its intrinsic value. Fellow All-Star mwolf12 is more specific:

This is a deep discount stock. P/E is below 10 and a price-to-book value below 2! Combine that with improving ROE, ROA, ROC, consistent earnings growth, sales growth and cash flow, and, well, you have a stock that I love to own.

I, too, would find that hard to resist. But Quanex's story is even better in that it also pays a 1.1% dividend. I'm adding this stock to my CAPS watch list today.

For me, it often helps to see what superior stock pickers are buying. If that describes you, too, then consider Champion Funds. Shannon Zimmerman's picks are up 13% on their respective benchmarks as I write. Check out the entire portfolio with a free, no-risk trial.

That's all for now. See you back here next week, when we once again look at the funds behind the fantasy.

Still hungry for stock ideas? Stop by CAPS and get your fill, 100% free.

Fool contributor Tim Beyers, who is ranked 5,083 out of more than 30,800 rated investors in CAPS, didn't own shares in any of the companies mentioned in this article at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on funds, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy has recurring fantasies about a desert island, margaritas, and a plate of burritos. Go figure.


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