Invest Like a Pro

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 that 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 15%.

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 Babson Capital Management -- the asset management arm of Mass Mutual. I've dug in to see what kind of moves Babson 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 stocks that Babson bought more of between its June filing and September filing ...


% Change in Babson Position

Current Market Value of Babson Position

CAPS Rating

Altria Group (NYSE: MO  )


$30 million


Goldman Sachs (NYSE: GS  )


$20 million


Google (Nasdaq: GOOG  )


$7 million


Source: CapitalIQ, Yahoo! Finance, and CAPS as of Nov. 20.

... and three that the firm lightened its position on.


% Change in Babson Position

Current Market Value of Babson Position

CAPS Rating

National Oilwell Varco (NYSE: NOV  )


$4 million


Texas Instruments (NYSE: TXN  )


$3 million


Morgan Stanley (NYSE: MS  )


$7 million


Source: CapitalIQ, Yahoo! Finance, and CAPS as of Nov. 20.

Now before you jump to it and make any hasty moves, remember that we're looking at what Babson 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.

A tale of two investment banks
Among the moves that Babson made during the quarter, the firm found itself cutting its stake in Morgan Stanley almost in half, while at the same time adding to its sizeable holdings of Goldman Sachs. Why stick with Goldman? Well, I'm guessing the answer is pretty simple -- Goldman seems to be the only one holding its ground during the credit turmoil.

As I've argued in the past, there are major pieces of Goldman (very profitable pieces) that are run like a black box as far as outsiders are concerned. This can make for some indigestion for investors, since the success that the firm has had during these trying times may just keep working until it doesn't -- and not give any early signs of stalling.

Of course, when you stack Goldman against others in the industry -- such as Morgan Stanley or Merrill Lynch (NYSE: MER  ) -- there's a pretty drastic difference in the performance to date.

CAPS players have also picked up on the divergence, and though Goldman is rated only one star higher than Morgan, the tone in CAPS is far more positive when it comes to Goldman. CAPS player MattCraig recently put a thumbs-down on Morgan, saying "if anyone will get this subprime issue wrong, it'll be [Morgan Stanley]. [It hasn't] come to terms [with the] issue here yet."

Meanwhile, on the Goldman page, CntrlSrcutinizer rated Goldman an outperformer, noting "Anyone who can make [money] by [going short] during the mortgage meltdown gets my vote."

So are you with Babson and the CAPS community? Or do you have other ideas? Hop on over to CAPS and start interacting with the other 70,000-plus CAPS players. While you're weighing in on these stocks, you can also find out more about over 5,000 other stocks that are currently rated on CAPS.

More CAPS Foolishness:

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