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 buy list:

Company

Last closing price

CAPS rating (out of 5)

GreenHunter Energy

$16.26

****

Medarex

$9.10

***

YRC Worldwide (Nasdaq: YRCW  )

$16.99

**

Colonial BancGroup (NYSE: CNB  )

$6.97

*

Flagstar Bancorp

$4.53

*

Sources: Motley Fool CAPS, Yahoo! Finance.

Normally I'd give GreenHunter Energy top billing here, but because YRC Worldwide is a Motley Fool Hidden Gems Pay Dirt pick, I want to see what funds are following in our team's stock-picking footsteps.

Two get five stars from ratings agency Morningstar, including the Fidelity Balanced (FBALX) fund, which last appeared in this column in May. Of the top five funds buying shares of YRC, Fidelity runs four.

Growth grabber Fidelity OTC (FOCPX) -- whose top holdings include Google and Apple (Nasdaq: AAPL  ) -- is the most interesting but also looks dangerously like a one-hit wonder: OTC returned 26% in 2007 to outperform the category average by more than 12 percentage points. So I click on the tab for "top fund owners" of YRC and, thankfully, find what I'm looking for: Fidelity Low-Priced Stock (FLPSX), a no-load winner that's run by superstar investor Joel Tillinghast.

Here are Tillinghast's top five holdings as of this writing:

Company

Last closing price

CAPS rating (out of 5)

Petrobras (NYSE: PBR  )

$56.98

*****

Bed Bath & Beyond (Nasdaq: BBBY  )

$28.01

***

Safeway (NYSE: SWY  )

$26.75

**

Yara International

$71.10

****

Oracle (Nasdaq: ORCL  )

$21.31

****

Sources: Morningstar, Motley Fool CAPS.

It warms my heart to see Oracle in his top five; I've owned shares for years and still believe it to be a bargain.

I'm attracted to free cash flow. Oracle has produced more than $7 billion of it over the trailing 12 months, thanks in part to astounding growth. Revenue improved by 24% and earnings grew 27% in the latest quarter.

More important than any of these numbers, though, is license revenue growth. Oracle sold 23% more database and middleware software in its fiscal fourth quarter than it did the year before. Acquiring BEA earlier in the year may have aided those numbers, but probably not enough to drop organic growth to the single digits. And yet Oracle -- with a forward P/E of just over 12 -- is valued as if it's exactly that sort of slow grower.

But that's my take. Would you own Oracle, or any of the stocks in the Fidelity Low-Priced Stock 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 19% 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 21,333 out of more than 110,000 participants in CAPS, owned shares of Google and Oracle at the time of publication. He also had a position in Google's 2010 LEAP options.

Apple and Bed Bath & Beyond are Stock Advisor selections. Bed Bath & Beyond is also an Inside Value recommendation and The Motley Fool owns shares. YRC is a Motley Fool Hidden Gems Pay Dirt pick. Petrobras is an Income Investor recommendation. Google is a Rule Breakers pick.

The Fool's disclosure policy has recurring fantasies about a desert island, margaritas, and a plate of burritos.


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