Sunday, May 06, 2007

No bubble here folks, move along.

I was in the library yesterday, and I happened upon a magazine I had never seen before, Better Investing, which caters to investment clubs. Flipping through it, I didn't think much of it, frankly. [My personal investment favorites are Barron's, Investor's Business Daily, with a dollop of Smart Money and the Wall Street Journal.] I'm not big on investment clubs either, as the group think aspect of it is the kind of thing I really like to stay away from, particularly with investing. Being a bit of a pain in the ass contrarian, I'm sure I'd get cashed out after not too long anyway.

The April 2007 issue of Better Investing had an interesting article though, a list of the "most popular and widely held stocks among investment clubs and their members nationwide as of early 2007". Not surprisingly, most of the names on the list were names that are pretty familiar to all of us, sort of a mega cap Peter Lynch type list. What I was really surprised by was how many energy names showed up on this list.

So go ahead, take a guess. Of the top 50 stocks, how many would you guess are energy names?

4 or 5 might be a reasonable guess, considering that roughly 10% of the market is energy. But since energy isn't sexy, [you can't go down to the mall and buy Ultra Petroleum jeans, and Grant Prideco doesn't yet make hip replacements], you might low ball it, and say 3. Or, you might go the other way and say "Hey, energy has been going gangbusters for 3-4 years now, and with CNBC having a hot line to Peak Oil Burgermeister Boone Pickens, I'm sure they have 6+."

The answer, as usual: It depends.

If you go by the magazine's main ranking, number of clubs holding the stock, there is exactly... one. Top 50 stocks, one is energy! I was amazed.

Exxon Mobil, the largest cap stock in the world, the best run oil major, the company reporting the most profits of any company in history, is, amusingly, number 14.

If you instead go by the secondary metric, the total value of clubs' holdings, then you get all of two energy stocks. Exxon Mobil at 7, and ConocoPhillips at 33. [Ranked by number of clubs holding it, COP is 79.]

Needless to say, I walked out of the library with a big grin on my face as I thought about how much buying these folks still have to do in the energy sector.

For reference:

Top 10 Stocks, ranked by # of funds holding:

Home Depot
Johnson and Johnson
Bed, Bath and Beyond

Energy stocks on the list:

Stock / Ranked by # of funds / Ranked by total value:

XOM 14 7
BP 63 59
CVX 69 63
VLO 71 71
COP 79 33
BTU 82 80
XTO 89 88
SLB 113
APA 116
CHK 121
BHP 128
HLX 140
NBR 144
DVN 153
SFY 156
SU 170
JOYG 177
KMP 196

Notes: After the top 100, they no longer provided the value rank. VLO, COP, BTU, XTO were noted as new to the Top 100 list and XOM and COP were noted to have advanced 5 or more positions since 2006, so the tide is changing. Note that many of the stocks widely owned by these investment clubs have staff dedicated to encouraging/marketing long term ownership of their stock, which is somewhat less prevalent (in my opinion) among energy stocks. But hey, they're probably a little busy right now.