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)

Powerwave Technologies

$4.05

*****

ReneSola (NYSE: SOL  )

$22.96

****

Solarfun (Nasdaq: SOLF  )

$21.64

***

China Architectural Engineering

$10.10

**

Kosan Biosciences

$5.43

**

Sources: Motley Fool CAPS, Yahoo! Finance.

Morningstar shows several fund fans for cellular infrastructure provider PowerWave. But only one fund gets five stars from rating agency Morningstar.

Allow me to introduce you to the Target Small Capitalization Value (TASVX) fund, which has outpaced its category peers every year since 2002. Credit the stock-picking skill of top manager Paul Viera and his team. Together, they've produced more than two percentage points a year of alpha over the fund's best-fit index.

Even better: Target Small Cap has no load and features a very reasonable 0.73% expense ratio. Here's a look at the top five stocks in its portfolio today:

Company

Last closing price

CAPS Rating (out of 5)

Cabot Oil & Gas (NYSE: COG  )

$68.03

****

FLIR Systems (Nasdaq: FLIR  )

$37.55

*****

Bucyrus Int'l (Nasdaq: BUCY  )

$75.36

*****

Westar Energy (NYSE: WR  )

$23.68

*****

Pharmaceutical Prod. Dev. (Nasdaq: PPDI  )

$44.24

*****

Sources: Morningstar, Motley Fool CAPS.

There are some excellent choices here. FLIR Systems, for example, gets the nod from one of my favorite Foolish stock pickers, TheGarcipian, for a short-term victory over the market. (He's been right thus far.)

Color me unsurprised. TheGarcipian is a great stock picker, and data from Fama and French illustrates that as an asset class, small-cap value stocks tend to outperform all others.

So I'll keep with history with today's top pick: small-cap mining equipment maker Bucyrus, which caught fire last month after digging up golden results in its fiscal first quarter. CAPS All-Star ww2004 called the run-up in February but, if his pitch is to be believed, years of gains remain:

World demand will continue to drive mining for the next several years. These guys provide the equipment to do it, the classic method to make money in mining. The order backlog is 2 years. Their business is global.

I agree, but I'm even more interested in what you think. Would you own Bucyrus, or any of the stocks in the Target Small Cap Value 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 are buying, consider Motley Fool Champion Funds. Its collection of market-beaters is up 22% on their respective benchmarks as of this writing. Examine the entire portfolio with a free, no-risk trial.

Fool contributor Tim Beyers, ranked 17,893 out of more than 105,000 participants in CAPS, didn't own shares in any of the companies 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.


Read/Post Comments (1) | 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.

  • Report this Comment On June 12, 2008, at 4:26 PM, stevemustangred wrote:

    This article was confusing. It seems to be written as stream of consciousness while hoisting a couple of pints and ordering a pizza at the same time. I don't understand what the list of contenders has to do with Target Small Cap and Powerwave was never really discussed at all.

    Picking 199 stocks, while acceptable for the CAPS game, doesn't really make one a great stock picker if 50% of them are up and 50% of them are down. It just means you pick a great amount of stocks. I don't think it is realistic for an individual to trade that many stocks.

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