Wall Street's Buy List

Actions speak louder than words, as the old saying goes. So why does the media focus so much attention on what Wall Street says about companies, instead of what it does with them?

Luckily for Wall Street watchers, the Internet brings us MSN Money's list of which companies the institutions are buying. True, we should be as skeptical of Wall Street's actions as we are of its words. But when the 115,000-plus lay and professional investors on Motley Fool CAPS agree with Wall Street's opinions, it just might be time for some buying.

Here's the latest edition of Wall Street's Buy List, alongside our investors' opinions of the companies involved:

Stock	Recent Price	CAPS Rating (5 Max):
Primus Guaranty (NYSE: PRS  )	$5.00	****
South Financial Group  (Nasdaq: TSFG  )	$8.00	*
Noble International (Nasdaq: NOBL  )	$4.96	*
TriCo Bancshares  (Nasdaq: TCBK  )	$18.13	*
BlueLinx Holdings  (NYSE: BXC  )	$5.70	*

Companies are selected from the "Institutional Ownership Up Last Month" list published on MSN Money on the Saturday following close of trading last week. Recent price and CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
For the most part, Main Street investors are -- how do I put this politely? -- less than impressed with Wall Street's top picks this week. (Less politely, they think the professionals are off their collective rocker.) There is, however, one stock on which the opinions of Wall Street and Main Street intersect: Primus Guaranty. Incidentally, that company is also a Motley Fool Global Gains recommendation.)

Here's why Fools like it:

The bull case for Primus Guaranty
The top-rated CAPS pitch in favor of Primus, penned by SpecialSituation back in April, goes like this:

[Primus] writes credit default swaps for a living. It usually holds its positions to maturity and rarely if ever hedges them. The company's main [operating] unit is Primus Financial Products, which is rated AAA by Moody's and S&P. As to be expected in a business such as this, the quality of the underwriting (in [Primus's] case, the quality of its ability to underwrite corporate credit risk) is paramount, and will be the primary determinent of this [company's] success over the long term. Historically, at least if one takes a look at the numbers, management appears to understand this well ... as [its] historical underwriting results have been superb. In fact, the more I delve into this management [team's] past the more impressed I become.

SpecialSituation goes on to lay out, over the course of seven paragraphs, a superb argument in the company's favor. I can't do it justice here. Read it for yourself instead.

Meanwhile, CAPS player charlie193 agreed with SpecialSituation's assessment back in February:

Primus is being whacked by financial know nothings because they have huge GAAP losses. These occurred because they have to mark to market their credit default swaps. Since they intend to keep these CDSs to maturity, they will eventually get all the "mark down" back. Since they are not a bank, they do not need to raise capital to meet banking [regulators'] requirements. So they are being punished unfairly. ... [W]hen they reprice their CDS stock to market (when the market [re-equilibrates]), they will show ridiculously large GAAP profits that will be as bogus as their current "losses."

But will Primus live to see those "bogus" profits? CAPS All-Star tuffsledding argues that it will. In November, he praised Primus for its "conservative management" and "prudent fiscal practices" and predicts that "this company will emerge stronger and more competitive when the dust settles."

Call me a coward if you like, but I'm not going to hazard an opinion on Primus. I know my limitations -- and this one's entirely beyond my ken: no trailing price-to-earnings figure ... but an ultra-cheap, low-single-digit forward P/E. Plenty of cash flow ... but it's generally grouped with competitors such as JPMorgan Chase (NYSE: JPM  ) and Merrill Lynch (NYSE: MER  ) as a "financial" stock -- and free-cash-flow calculations don't work so well with those.

Throw in a negative book value, and I honestly can't tell you whether this is the world's cheapest stock and best value in the history of investing, or a total basket case.

Time to chime in
Fools, I give up. Instead of telling you about Primus, why don't you tell me? Is this stock too good to pass up, or is it too good to be true?