I like to check out the biggest holdings of the major mutual funds, for two reasons.\u00a0\u00a0 It shows which names are already loved by the Street and at risk of becoming less loved, and vice versa. Second, the guys and gals at the big fund complexes are smart and very well informed; managements of the companies they own or might own are in their offices regularly, and analysts and salesmen are constantly phoning with the latest company tidbits and industry insights. If a couple of funds have a major position in a name, it tells me the fundamentals are probably solid.<\/p>\n
I looked at the top 10 holdings of 18 large-cap growth funds run by Vanguard, Fidelity, T. Rowe, and Gabelli\u2014173 positions in all because the funds owned some bonds and foreign stocks. Here are the takeaways:<\/p>\n
I own 16 of the stocks owned in size by these funds, so I can\u2019t say I disagree with their views. That said, healthcare looks rather over-owned and in some cases quite expensive, though I agree it is the sector with the best earnings and revenue momentum. Don\u2019t forget that blockbuster new drugs usually replace drugs already on the market, and healthcare does have exposure to the strong dollar and weak overseas economies. On the other hand, industrial stocks seem too unpopular. The XLI climbed just 6.2% over the last year versus 10.3% for the S&P 500, even though the U.S. economy is accelerating and many industrial companies are producing quite respectable EPS growth despite the strong dollar. (Admittedly the collapse in energy prices is a new headwind for some industrial stocks, albeit positive for others.) I think it is bullish for consumer durables such as restaurants, retailers and apparel that they are not popular holdings even though both revenue and margins should benefit from lower oil prices.<\/p>\n
Copyright Thomas Doerflinger 2015. All Rights Reserved.<\/p>\n
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I like to check out the biggest holdings of the major mutual funds, for two reasons.\u00a0\u00a0 It shows which names are already loved by the Street and at risk of becoming less loved, and vice versa. Second, the guys and … Continue reading