"Actions speak louder than words."

It's an old saying, with more than a grain of truth to it, I'll warrant. So why is it that when the Wall Street firms merely "initiate coverage" or "upgrade" their ratings on a company, that gets all the news coverage? After all, those are only words, when what really matters is how the big boys act. Luckily for Wall Street watchers, finding out which professionals put their money where their corporate mouthpieces are has become relatively easy in this Internet age of ours. All we have to do is read MSN Money's list of which companies the Street is most actively buying.

But once we've done that, what next? After all, "Monkey see, monkey do" may not be the basis for the soundest of investment strategies. That's where Motley Fool CAPS can help. The Fool's newest venture into the realm of collective intelligence collects ratings from 16,000 lay and professional analysts, then overweights the most successful raters' opinions to come up with a "CAPS rating" from one to five stars (five being the best). If Wall Street's buying and the smartest investors in Fooldom say they're right to do so, then that should get your attention.

And so, let's meet today's list of contenders:

30-Day Price


CAPS Rating

Movie Gallery




Credence Systems




Vanda Pharmaceutical








China Techfaith




Companies are selected from the "Institutional Ownership Up Last Month" list published on MSN Money on the Saturday following close of trading last week. Price increase and current pricing also provided by MSN Money on the same date. CAPS ratings from Motley Fool CAPS.

Poultry and offspring
Another well-worn saw asks us: "Which came first, the chicken or the egg?" As you've noticed by now, one characteristic that each of these stocks has in common is that they've experienced dramatic price increases over the last 30 days. But are the Wall Streeters buying because the stocks have gone up -- playing the momentum game -- or is their heavy buying causing the prices to spike? It could even be a combination of the two, a vicious circle of some buyers pushing the price up, and others hopping aboard the bandwagon and enjoying the ride.

Don't get plucked or scrambled
I can't help but notice one other characteristic these companies share, however, and that's the fact that not one of them enjoys much support among CAPS raters. At one end of the scale, we see Vanda, Daktronics, and China Techfaith garnering lukewarm three-star ratings. At the other, we see Movie Gallery -- which, like rival Blockbuster (NYSE:BBI), continues to fight for its life against rule-breaking DVD-by-mailer Netflix (NASDAQ:NFLX) -- tarred as a one-star underperformer.

What is it, exactly, that Fools hate so much about Movie Gallery? Several of the Fool's own best and brightest explain:

  • Fool co-founder David Gardner (a.k.a. TMFBreakerDave): "Yes, I know Movie Gallery has already dropped about 90% in the past 12 months. But it doesn't take a lot of imagination to see another 90 percentage points down in the next 12 months, here. We shall see. These guys bought Hollywood Video in April of last year. I think that says enough in support of: Underperform."
  • TMFBreakerCharly also pulls no punches: "Movie Gallery is in an awful & obsolete business. Video rental stores are so 1980s. Netflix now and later video on demand is killing them. MOVI isn't even the best at what it does. That dubious title belongs to Blockbuster. The company is saddled with a ton of debt and making its interest payments could be a problem if revenues continue their downward slide, an event I consider to be an inevitability. Ultimately I see MOVI going into bankruptcy." Ouch!
  • But the coup de grace here is the fact that the No. 1 CAPS player of all time, TMFEldrehad, rates Movie Gallery an underperform. While he doesn't go into detail on the "whys," he does offer a lesson in the value of listening to smart investors on CAPS -- and ignoring the noise on the Street: "Early in my CAPS career, this was my worst [underperform] pick ever, with a score of around -70 or so. I told myself to have patience, and as of now, it's certainly paid off as what was once my worst pick ever has become, as of this writing, my best pick ever."

Are they right? Are they wrong? Tell us what you think on Motley Fool CAPS. You see, on CAPS, it doesn't matter if your name has a "TMF" in front of it, or a "CFA" after it. Unlike Wall Street, we welcome all comments on CAPS, where the best arguments -- and the best records -- carry the day.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 457 out of more than 16,000 raters. Netflix is a Stock Advisor pick. Daktronics was once a Stock Advisor selection. The Fool has a disclosure policy.