The Stocks the Funds Are Buying

We all know which stocks have made Wall Street's Buy List. What I want to know -- and I'm guessing you do, too -- is who's doing the buying. Which funds are buying Wall Street's most popular stocks this week ... and how does their judgment compare with that of our Motley Fool CAPS community?

Here's our latest group of contenders:

Company

Currently

Fetching

CAPS rating

Allscripts Healthcare

$23.75

***

Third Wave Technologies

$7.04

**

First Financial Corp.

$31.60

**

First Charter Corp.

$28.75

**

PrivateBancorp

$35.89

**

CVB Financial

$12.19

*

Sources: Motley Fool CAPS, Yahoo! Finance.

List-topper Allscripts, which competes with Quality Systems (Nasdaq: QSII  ) in providing software to automate medical practices, is being followed by some of the best funds I know, including:

  • Rainier Small/Mid Cap Equity (RIMSX), which has smashed the benchmark Russell 2500 by more than 3 percentage points annually since current managers James Margard and Peter Musser opened for business in 1994.
  • T. Rowe Price Small-Cap Stock (OTCFX), a top fund that has fallen on hard times recently -- it's losing to the S&P thus far during 2007 -- but which has been a long-term winner under the 15-year stewardship of manager Gregory McCrickard.
  • Fidelity Small Cap Stock (FSLCX), a closed no-load fund that sports an exceedingly cheap 0.94% expense ratio, especially when you consider how manager Paul Antico has handily beaten both the S&P 500 and Russell 2000 over the past five years.
  • Fidelity Capital Appreciation (FDCAX), a large no-load fund that is recovering well in 2007 after losing to the S&P 500 last year.
  • T. Rowe Price New Horizons (PRNHX), which has an enviable performance record under championship manager John Laporte, who celebrates his 20th year leading New Horizons next month.

Of these funds, it's New Horizons, which originally was the pet project of T. Rowe Price founder Thomas Rowe Price, that interests me most. Here are its top five stock positions:

Company

Currently

Fetching

CAPS rating

NII Holdings (NASDAQ:NIHD)

$73.63

*****

Henry Schein (NASDAQ:HSIC)

$58.19

****

DaVita (NYSE:DVA)

$54.97

*****

O'Reilly Automotive (NASDAQ:ORLY)

$33.57

*****

FMC Technologies (NYSE:FTI)

$85.49

*****

Sources: Morningstar, Motley Fool CAPS.

This strikes me as an excellent portfolio. Consider NII Holdings, which was created to bring Nextel's signature direct connect technology to foreign markets. It's been good business thus far: NII sports double-digit returns on equity and capital and has grown revenue by more than 35% over each of the last three years.

Impressed? I am. So are our All-Star CAPS investors. Every one of the 33 superstar stock pickers who have rated NII in the database expect it to outperform the market. Then there's Laporte, whose history of market-crushing performance has me thinking of adding NII to my CAPS portfolio.

For me, it often helps to see what superior stock pickers are buying. If that describes you, too, then consider Champion Funds. Newsletter editor Shannon Zimmerman's picks are up 11% 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 top stocks.

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

Quality Systems is a Stock Advisor selection. T. Rowe Price New Horizons and Fidelity Capital Appreciation are both Champion Funds recommendations.

Fool contributor Tim Beyers, who is ranked 7,077 out of more than 60,000 CAPS participants, didn't own shares in any of the companies mentioned in this article at the time of publication. Find Tim's portfolio here and his latest blog commentary here. 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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