The folks who run America\u2019s biggest equity mutual funds are very smart (most of the time) and very well informed. They get the \u201cfirst call\u201d from Wall Street analysts, and speak to top corporate executives regularly.\u00a0 For example, no corporate management does a road show in Boston without stopping at Fidelity\u2019s offices to tell their story.\u00a0 So we scanned the Websites of Fidelity, Vanguard and T. Rowe Price to find out what 16 of their actively managed domestic equity mutual funds owned.\u00a0 They are all large, large-cap, growth oriented funds.\u00a0 Only the top 10 stock holdings of each fund are disclosed, and not necessarily in order of their importance.\u00a0 So we can learn how many funds, for example, have ExxonMobil among their top 10 holdings.\u00a0 This is a decent indicator of stocks\u2019 popularity with big,\u00a0 growth-oriented mutual funds.<\/p>\n
Whether it is \u201cbullish\u201d or \u201cbearish\u201d for a stock to be heavily owned by these funds is a matter of debate.\u00a0 The bull case is that smart, well-informed portfolio managers like them now.\u00a0 The bear case is that they \u201calready own\u201d them, and their next likely move will be to sell\u00a0 them\u2014but maybe not for a long time.<\/p>\n
The two most popular stocks are AAPL<\/strong> with 12 places (no surprise) and GOOG<\/strong> with 9 (a bit of a surprise, because management is rather unpopular with investors, and allegedly unfocused).<\/p>\n QCOM<\/strong> is fairly popular with 4 places; it is the best semiconductor play on smartphones and far more popular than INTC (0 places), which so far has missed the mobile boat.<\/p>\n EBAY<\/strong> is also fairly popular with 4 places; PCLN<\/strong> has just 1.<\/p>\n Interestingly, MSFT<\/strong> is still fairly popular with 4 places\u2014versus just 1 for IBM<\/strong>.\u00a0 To hear some of the TV pundits talk, one would think MSFT is just a step behind RIMM on the road to oblivion.\u00a0 But the Big Money is betting that, despite the alleged demise of the PC, MSFT\u2019s very strong franchise in global corporations (not just PC operating systems and applications, but also servers) will continue to generate strong cash flow.\u00a0 Balmer\u2019s company always seems to be a day late and a gigabyte short, but in fact it has done well in game consoles, and the Surface has received some good reviews.<\/p>\n XOM<\/strong> is by far the most popular energy stock (8 places), which is surprising because its reserve growth is weak, and it overpaid for natural gas play XTO.<\/p>\n The most popular retailers are HD<\/strong> (4 places), WMT<\/strong> (4) and \u2013 far more interestingly — TJX<\/strong> (3).<\/p>\n For contrarians, the most salient fact is that most large industrials and materials such as CAT, DE, UTX, DD, and DOW are not represented.\u00a0\u00a0 The exceptions are GE<\/strong> (4 places), DHR<\/strong> (2 places) and BA<\/strong> (1).<\/p>\n The most popular healthcare names are JNJ<\/strong> and PFE<\/strong>, both with 4 places.<\/p>\n The Big Money likes the global credit card networks, MA<\/strong> (3 places) and V<\/strong> (4 places).\u00a0 Evidently PM\u2019s are not worried about disintermediation from new technology.<\/p>\n In finance the Big Money is betting on two names that have become \u201cconsensus longs\u201d — USB<\/strong> (4 places) and WFC<\/strong> (5).\u00a0 These \u201chigh quality\u201d companies came out of the crisis relatively unscathed but, in the case of WFC, much bigger.\u00a0\u00a0 Compared to Wall Street firms they have limited regulatory risk, and some major competitors (such as C, BAC, and European banks) are pulling back from key markets.\u00a0 Incredibly, BAC bought Countrywide to become a giant in mortgages but now is a bit player; meanwhile, WFC has grabbed a 33% share.\u00a0 JPM<\/strong> has just 2 places on the Big Money list.<\/p>\n Copyright Thomas Doerflinger 2012.\u00a0 All Rights Reserved.<\/p>\n","protected":false},"excerpt":{"rendered":" The folks who run America\u2019s biggest equity mutual funds are very smart (most of the time) and very well informed. They get the \u201cfirst call\u201d from Wall Street analysts, and speak to top corporate executives regularly.\u00a0 For example, no corporate … Continue reading