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)

VanceInfo Technologies

$9.98

*****

James River Coal

$35.33

***

Enterra Energy Trust (NYSE: ENT  )

$4.10

****

China Architectural Engineering
(AMEX: RCH  )

$9.02

**

UTStarcom

$4.54

**

Sources: Motley Fool CAPS, Yahoo! Finance.

Miner James River Coal has several fund fans but only one merits five stars, according to Morningstar.

Allow me to introduce you to the Fidelity Balanced (FBALX) fund. Co-managers Lawrence Rakers and George Fischer won't have you dancing in the streets with their low double-digit returns. But over the past three- and five-year periods they've substantially outperformed category peers while charging a more than reasonable 0.60% expense ratio.

Here's a look at the top five stocks Rakers and Fischer own today:

Company

Last closing price

CAPS rating
(out of 5)

National Oilwell Varco (NYSE: NOV  )

$81.96

*****

AT&T (NYSE: T  )

$39.18

****

Valero Energy (NYSE: VLO  )

$49.66

*****

JPMorgan Chase (NYSE: JPM  )

$43.05

**

Bank of America (NYSE: BAC  )

$34.73

***

Sources: Morningstar, Motley Fool CAPS.

There are some good choices here. National Oilwell Varco keeps posting impressive numbers. Valero, meanwhile, could be America's next top value stock.

My favorite, though, is Income Investor pick Bank of America -- for the same reasons Foolish colleague Jim Fink gave in a late April update to subscribers:

Faced with a $4.8 billion increase in loan-loss reserves, $1.9 billion in security writedowns, and $2.7 billion in loan charge-offs, CEO Ken Lewis admitted during the conference call that the results were "much worse than our expectations three months ago." ... On the bright side, Lewis said the bad results "have not changed our philosophy about the dividend." Translation: no imminent cut. On the dark side, he hedged by saying that if things get noticeably worse -- say, a prolonged recession -- then "we would look at the dividend." ... [W]e continue to like the shares of this financial powerhouse for the long term.

I do, too. A 7.4% dividend yield will do that. And think about this: Even if there were a dividend cut -- by half, say -- that'd still be a 3.70% yield, or a 75% premium to the S&P 500 average.

I'm not sure a cut is in the works, though. A check of B of A's cash flow statement shows that the bank produced roughly twice the cash from operations it needed to cover its capital expenditures and dividend payments.

But that's my take. I'm more interested in what you think. Would you own Bank of America, or any of the stocks in the Fidelity Balanced fund, 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 buy, consider Motley Fool Champion Funds. Its collection of market beaters is up an average of 22% on their respective benchmarks as of this writing. Examine the entire portfolio with a free, no-risk trial.

Fool contributor Tim Beyers, who is ranked 15,160 out of more than 105,000 participants in CAPS, didn't own shares in any companies mentioned in this article at the time of publication.Bank of America and JPMorgan Chase are Income Investor recommendations. You can also try this market-beating service free for 30 days, with no obligation to subscribe.

You can read Tim's profile and his latest blog commentary. The Fool's disclosure policy has recurring fantasies about a desert island, margaritas, and a plate of burritos. Go figure.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 651840, ~/Articles/ArticleHandler.aspx, 7/22/2014 8:13:35 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement