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 ... and how does their judgment compare with that of our Motley Fool CAPS community?

Here's our latest group of contenders:

Company

Last closing price

CAPS Rating (out of 5)

Infinera (NASDAQ:INFN)

$13.08

****

Genco Shipping & Trading

$63.16

****

Amkor Technology

$11.71

****

GMH Communities Trust

$8.91

****

DryShips (NASDAQ:DRYS)

$85.65

**

Sources: Motley Fool CAPS, Yahoo! Finance.

Rule Breakers pick Infinera, which specializes in optical networking, has plenty of fund fans. But only one earns the highly coveted five-star rating from Morningstar.

Allow me to introduce you to Fidelity Growth Company (FDGRX), whose manager, Steve Wymer, has been putting up championship numbers for years. His average annual returns over the past 3-, 5-, and 10-year periods rank in the top 10 among his large-growth peers. That can't be too surprising, though; Wymer scores five points of alpha -- the amount of a fund's return related to stock-picking ability -- versus peers in Growth Company's best-fit index. That's Ken Heebner and Arieh Coll territory. Yet Fidelity charges the fund's investors -- at least those lucky enough to get in before it closed to new investments -- a measly 0.96% expense ratio annually.

Here's a look at the top five positions Wymer is holding now:

Company

Last closing price

CAPS rating (out of 5)

Nintendo

$61.43

*****

Google (NASDAQ:GOOG)

$502.86

**

Monsanto (NYSE:MON)

$116.43

****

Celgene (NASDAQ:CELG)

$54.56

****

Elan (NYSE:ELN)

$23.71

***

Sources: Morningstar, Motley Fool CAPS.

This strikes me as an intriguing portfolio. Consider Google, which has fallen to lows not seen since last August but remains the dominant digital advertising platform. Nearly 10% of its market value is in cash, equivalents, and short-term investments.

Even if you believe that Google is lying about its outrage over a potential Microsoft deal for Yahoo! (Nasdaq: YHOO  ) , there's no reasonable scenario wherein a company this well-positioned, with this much capital, should be trading for a discount to its expected growth. Yet that's where Google is; a 0.76 PEG ratio for 2008 and 0.60 for 2009 proves it.

Some Fools see that as unreasonable. CAPS investor naylorj, for example. Quoting from a pitch posted earlier this week:

Innovative, financially strong company that will continue to gain market share; 50% of search activity comes from overseas markets; still significant growth opportunities in online advertising on a global scale; year-end price target $690-$700.

My guess is that Wymer, who more than doubled his stake in DoubleGoo between 2004 and 2007, agrees. I sure do.

But that's my take. What's yours? Would you own Google, or any of the stocks in Fidelity Growth Company's portfolio, at today's prices? Log into CAPS today and let us know what you think. It's 100% free to participate.


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Related Tickers

9/19/2014 3:59 PM
CELG $93.85 Up +0.58 +0.62%
Celgene CAPS Rating: *****
DRYS $3.00 Up +0.02 +0.67%
DryShips, Inc. CAPS Rating: ***
ELN.DL2 $0.00 Down +0.00 +0.00%
Elan CAPS Rating: ***
GOOGL $605.40 Up +8.13 +1.36%
Google (A shares) CAPS Rating: ****
MON $115.11 Down -0.38 -0.33%
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YHOO $40.93 Down -1.16 -2.74%
Yahoo CAPS Rating: ***

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