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)

Broadcom

$26.49

***

Xinhua Finance

$4.23

**

Ultratech

$14.61

*

SIGA Technologies (NASDAQ:SIGA)

$3.40

**

Overstock.com (NASDAQ:OSTK)

$19.95

*

Sources: Motley Fool CAPS, Yahoo! Finance.

Talk about bottom-fishing. I'm not at all convinced these stocks would make for a great portfolio. And I'm not at all surprised to see that very few funds buying shares of top pick Broadcom are high-performers.

Only one catches my eye: Fidelity Mid-Cap Stock (FMCSX), a closed, no-load fund that has twice lost out to category peers since 2004. Manager Shep Perkins is barely keeping pace with them this year.

But I'm not sure that tells the whole story. Here's why: Perkins only took the reins in January of 2005. His picks have returned 14.3% a year since. Not an easy task when you're managing $12.9 billion in assets.

Here's a look at the top five stocks Mid-Cap Stock owns today:

Company

Last closing price

CAPS rating (out of 5)

St. Jude Medical (NYSE:STJ)

$42.99

*****

Flextronics (NASDAQ:FLEX)

$11.01

****

Juniper Networks (NASDAQ:JNPR)

$28.79

***

Comverse Technology

$18.13

***

Peabody Energy (NYSE:BTU)

$62.40

****

Sources: Morningstar, Motley Fool CAPS.

There are some good choices here. Juniper, for example, is growing faster than Cisco (Nasdaq: CSCO  ) , but it's priced just as reasonably on a PEG basis.

Peabody Energy also intrigues me because of rising coal prices. CAPS All-Star Sinchiruna best explained the thesis in March, I think:

[Peabody Energy] is the best play in the coal sector by far, because of its geographic scope and strategic focus on international sales. Coal prices are going up right alongside oil, and I expect [Peabody] to continue rising for several years... I'd be very surprised if BTU doesn't reach $100 by the end of the decade.

I'm not sure I'd go that far. but there's no denying the tailwinds coal producers are enjoying. Ask the good folks at Massey Energy, who last month raised estimates for 2010 coal prices by 36%, then rolled out a $90 million capital spending plan to take advantage.

Expect Peabody to take similar steps ... and, trading for just 14 times next year's estimates, deliver coal-fired returns to investors as a result.

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

If you like seeing what superior stock pickers are buying, considerMotley Fool Champion Funds. Its collection of market-beaters is up 19% on their respective benchmarks as of this writing. Examine the entire portfolio with a free, no-risk trial.

Fool contributor Tim Beyers, ranked 17,892 out of more than 102,000 participants in CAPS, didn't own shares in any of the stocks mentioned in this article at the time of publication.

Find Tim's portfolio here and his latest blog commentary here. The Fool's disclosure policy has recurring fantasies about a desert island, margaritas, and a plate of burritos. Go figure.


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