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:


Recent Price

CAPS Rating

(5 max):

Sanders Morris Harris  (NASDAQ:SMHG)



H&E Equipment Services  (NASDAQ:HEES)



Synta Pharmaceuticals  (NASDAQ:SNTA)



Radian Group  (NYSE:RDN)



Taylor Capital Group



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 provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Wall Street vs. Main Street
With no stock on our list enjoying more than a middling three-star rating, it appears Main Street investors are less than impressed with Wall Street's top picks this week. One of the three-star stocks, though, does attract my attention.

You see, I profiled Sanders Morris Harris in "Get to Know a Guru" last summer, and came away mightily impressed. Back then, the firm was ranked in the top 10% of professional investors tracked by CAPS. It was getting three out of every five recommendations right and scoring a perfect 100% on its "underperform" picks -- impressive stats.

While SMH's record has slipped a bit in the interim, the firm still ranks in the top 15% of investors, and maintains a 53% record for accuracy. But how does it look as an investment?

The bull case for Sanders Morris Harris

  • Writing in May of last year, mrgeraldoman saw: "nothing bad about this company. keep an eye on the cash flow."
  • Around the same time, onefreshone praised SMH for its "experienced management." (A fact I highlighted when writing up the company as well. SMH has recruited experienced analysts from the likes of JPMorgan (NYSE:JPM) and Citigroup (NYSE:C).)
  • More recently, at the end of June, ArfytheSeal argued that SMH has: "Great long term growth potential despite being in a tough sector." 

Valuation-wise, SMH sells for about 2.8 times tangible book value. For context, that's considerably more than similarly sized peer SWS Group (NYSE:SWS), profiled here in May, commands. Also more than the bigger bankers from whom SMH poaches its analysts, like JPMorgan and Citigroup. 

Then again, SMH has been growing its tangible book value faster than either Citi or SWS (if not as fast as JPMorgan). Moreover, you'd probably expect an analyst with SMH's record of success to be able to keep on growing, and so perhaps this justifies the premium. But I have to say: It looks a little rich to me.

Time to chime in
Of course, the aim of this column isn't just to tell you what I think about Sanders Morris Harris -- or even what other CAPS members are saying. We really want to hear your thoughts. Click on over to Motley Fool CAPS and tell us what you think.

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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 No. 487 out of more than 115,000 members. The Fool has a disclosure policy.