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 what our Motley Fool CAPS community thinks?

Here's our latest group of contenders:

Company

Last closing price

CAPS rating
(out of 5)

Century Aluminum (NASDAQ:CENX)

$68.97

****

Lumber Liquidators

$9.53

***

Greenbrier Companies

$27.16

***

Clearwire (NASDAQ:CLWR)

$16.39

**

Alpha Natural Resources

$41.33

***

Sources: Motley Fool CAPS, Yahoo! Finance.

Metalworker Century Aluminum has plenty of fund fans. But of the top five buyers, only one commands at least four stars from Morningstar.

Allow me to introduce you to Stratton Small-Cap Value (STSCX), a no-load winner from the family of funds founded by championship manager James Stratton in the 1970s. But it isn't Stratton who leads Small-Cap Value; Gerald Van Horn has managed the fund since 2000. His record in that time has been impressive. Five of the past seven years he's produced double-digit returns, including a 49.6% gain in 2003.

Small-Cap Value hasn't had as much success since January, down 3.8% year to date. Nevertheless, I like many stocks Van Horn is betting will bring him a turnaround. Here are his top five:

Company

Last closing price

CAPS rating
(out of 5)

Amedisys (NASDAQ:AMED)

$46.57

*****

Energen (NYSE:EGN)

$63.40

*****

Century Aluminum

$68.97

****

DRS Technologies (NYSE:DRS)

$57.32

*****

GameStop (NYSE:GME)

$47.41

****

Sources: Morningstar, Motley Fool CAPS.

Hospice care provider Amedisys, an all-star stock and Stock Advisor pick that was on fire in November, is my favorite from this list. But I may be in the minority. Shares of Amedisys are down 4% since the beginning of the year.

Interestingly, some of our best CAPS investors see that as unfair. Here's how All-Star Kinzo put it earlier this month: "Baby-boomers will soon need long-term health care and who better than Amedisys!? Great U.S. economic hedge."

I agree. Americans are aging and would prefer home health care to a nursing home stay. If Medicare can provide that care -- as it does 90% of the time in the case of Amedisys services -- all the better.

Mix in a modest 0.95 PEG ratio, which suggests this stock is trading for a discount, and I can understand why a bargain hunter like Van Horn is interested.

But that's my take. What's yours? Would you own Amedisys or any of the stocks in Stratton Small-Cap Value'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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