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?
Once upon a time, we didn't know what the bankers were up to. Now, thanks to the folks at finviz.com, it's easy to keep tabs on the stocks that financial institutions buy and sell. And the 180,000-plus lay and professional investors on Motley Fool CAPS can lend us further insight into whether these decisions make sense.
Here's the latest edition of Wall Street's Buy List, alongside our investors' opinions of the companies involved:
Companies | Recent Price | CAPS Rating(out of 5) |
|---|---|---|
Berkshire Hathaway (NYS: BRK.A) | $111,500.00 (!) | ***** |
Boingo Wireless (NAS: WIFI) | $8.77 | *** |
Cell Therapeutics (NAS: CTIC) | $1.35 | *** |
Neoprobe (ASE: NEOP) | $2.87 | * |
Gold Resource Corp. (NYS: GORO) | $24.82 | * |
Companies are selected based on past-three-month changes in institutional ownership, as reported on finviz.com. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.
Wall Street vs. Main Street
Up on Wall Street, the professionals think these five stocks are the greatest things since sliced bread. (And by "bread," I mean money.) They've been:
hedging against a U.S. default by hoarding Gold Resource Corp.
encouraged by the 26% rise in revenues that Neoprobe just reported, and the company's much-reduced quarterly loss.
cheering the reduction in costs -- and losses -- at Cell Therapeutics as well.
piling into Boingo Wireless ahead of its own earnings report, due out Thursday.
Main Street investors' opinions of these four stocks, however, continue to range from lukewarm (three-starred Boingo and Cell Therapeutics) to outright hostile (Neoprobe and Gold Resource.) Fortunately, there is one company that both Main Street and Wall Street investors can agree on.
Berkshire Hathaway
It's not exactly a surprise to learn that professionals and lay investors alike feel comfortable investing alongside the Oracle of Omaha. But what you might find surprising is that a lot of folks want to own Berkshire Hathaway on its own merits. Take CAPS member LWILLS, for example. LWILLS currently owns only Berkshire's class B shares but is considering an upgrade to the pricier A shares, arguing that "at 1.1 times book value, I find it a compelling buy."
CAPS All-Star joaquingrech, meanwhile, calls Berkshire "a conglomerate of the best companies on the index." And joelechols comes straight out and says it: "I'm not buying Buffett; I'm buying Berkshire. Buffett will retire soon, and he'll leave behind an outstanding holding company full of moated companies."
Buy it like Buffett?
But would Berkshire really be a buy without Buffett to lead it? At 17 times earnings, Berkshire Hathaway sells for a 45% premium to the average property-and-casualty insurer. Its P/S ratio commands an even steeper premium -- 59% above average. On the other hand, Berkshire Hathaway is not just any old insurer. As I pointed out in June, the company boasts a P&C combined ratio of 92.2 -- better than most companies in the insurance industry, and far superior to the numbers at giant insurer AIG (NYS: AIG) .
And of course, Berkshire is more than just insurance. As joaquingrech said up above, it's a "conglomerate" of some of the best businesses on the globe, from candy, couches, and chemicasl to private jet rentals, trains, and beyond. Yet this cross-section of some of the best businesses American industry has to offer costs only 1.15 times book value. Meanwhile, the S&P 500 index as a whole -- which, by definition, includes both good businesses and bad -- sells for more than 2 times book!
Foolish takeaway
In uncertain times like these, there's a lot to like about investing alongside Buffett -- and, for as long as he's still holding the rudder at Berkshire, investing in Buffett as well. Do you think the stock's a buy? Tell us why.
At the time thisarticle was published Fool contributor Rich Smithowns no shares of, nor is he short, any company named above. You can find him on CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 585 out of more than 170,000 members.The Motley Fool owns shares of AIG and Berkshire Hathaway.Motley Fool newsletter serviceshave recommended buying shares of Berkshire Hathaway. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has adisclosure policy.
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