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)

U.S. Global Investors

$18.05

*****

Clayton Williams Energy

$106.47

***

Cardica

$8.81

***

Ivanhoe Energy (Nasdaq: IVAN  )

$3.24

***

Tri-Valley (NYSE: TIV  )

$6.75

*

Sources: Motley Fool CAPS, Yahoo! Finance.

Fittingly, U.S. Global Investors has a number of fund fans, three of which get five stars from ratings agency Morningstar.

I've two favorites among the three. First, there's the Royce Low-Price Stock Fund (RYLPX), whose market-crushing strategy depends on buying stocks for $10 or less per share. Second, and my top choice, is the no-load Kinetics Small Cap Opportunities Fund (KSCOX).

Top managers Peter Doyle and Murray Stahl have as good a record as you'll find in fund land. At Small Cap Opportunities, the pair has returned better than 15% a year over the last five. How do they do it? A 78 R-squared rating -- calculated using the fund's best-fit index -- suggests that they zig as peers zag.

Here are the top five stocks Doyle and Stahl hold as of this writing:

Company

Last closing price

CAPS rating (out of 5)

Reliant Energy (NYSE: RRI  )

$21.68

***

Icahn Enterprises (NYSE: IEP  )

$73.25

***

Nasdaq OMX (Nasdaq: NDAQ  )

$28.57

*****

InterContinental Exchange (NYSE: ICE  )

$122.01

***

Eaton Vance

$40.59

**

Sources: Morningstar, Motley Fool CAPS.

There are some interesting choices here. InterContinental Exchange, for example, which made an appearance in this column a year ago at this time. The stock is down 18% since. Yet some investors believe that as the market for carbon credits expands, so, too, will the company's fortunes. CAPS investor slimpickins2 explained the thesis in May. Quoting:

Carbon credits....when they come to [the] US it will be big, ICE has a small advantage, because they are dealing with the ECX in Europe so they are getting an idea of how it works. Obstacles are our government and system, and how it actually [unfolds] in the US, and when. It could be years, but when it does, big business will be generated.

Interesting, but, of Doyle and Stahl's top five, I still favor Motley Fool Inside Value pick Nasdaq OMX. Here's my rationale, posted to CAPS earlier this month: "Even though the stock market has been topsy-turvy, trading volume remains high. I don't see this stock trading for [seven] times earnings for much more than a few months. If that."

I'm not the only one who sees the cheap in Nasdaq OMX shares. Here is CAPS investor fuzion23's pitch from last week:

This is one of the best stock [exchanges] out there ... I like the fact that they got Bourse Dubai invested in the combined company. This will help NASDAQ with their plan for expanding globally starting with Europe. Also in the works right now is the [Philly] Stock Exchange and Boston Stock exchange. The [Philly] stock exchange will help boost NASDAQOMX option business and the Boston Stock exchange acquisition will help with second listing business ... I believe [the stock is] really cheap now based on its PEG ratio, which is below 1.

Agreed, but I'm more interested in what you think. Would you own Nasdaq OMX, or any of the stocks in the Kinetics Small Cap Opportunities fund, at today's prices? Log in to 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 21% 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 20,351 out of more than 110,000 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 and his latest blog commentary. Morningstar is a Stock Advisor pick. The Fool's disclosure policy has recurring fantasies about a desert island, margaritas, and a plate of burritos. Go figure.


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