Clubs Dropped Telecoms for Blue Chips in 2001
America’s investment clubs hung up on several telecom stocks last year while raising their holdings of some old-fashioned blue-chip names, a new survey shows.
More clubs said they owned blue chips General Electric Co. and Pfizer Inc. as of Dec. 31, sharply boosting their rank on the top-10 list of club-held stocks. Meanwhile, telecom firms Lucent Technologies Inc. and Avaya Inc. fell out of the top 10, according to the April issue of Better Investing, a publication of the National Assn. of Investors Corp.
Each year the NAIC, a Madison Heights, Mich.-based group that is an umbrella organization for clubs, highlights the 100 most popular stocks among its members. About 32,300 clubs belong to the NAIC.
In an investment club, individuals such as co-workers or friends pool their money and research efforts to build stock portfolios, meeting regularly to vote on what to buy, sell or hold.
Lucent, whose value plunged 53% last year during the telecom sector’s collapse, tumbled from the third-favorite club stock at the end of 2000 to No. 14 last year, and Avaya, whose shares were spun off from Lucent in October 2000, slid to No. 19 from No. 8 a year ago.
Lucent stock was owned by 4,813 clubs at year-end, compared with 13,460 at the end of 2000.
Lucent’s former parent, AT&T; Corp., fell to No. 35 among clubs from No. 17 in 2000, even though the shares gained 35% last year after diving 66% in 2000.
As telecom stocks fell out of favor with club members, more clubs bought conglomerate GE: Nearly 13,400 clubs owned the stock as of Dec. 31, up from 9,774 a year earlier. Drug firm Pfizer also became a big favorite. It was owned by 13,424 clubs at year-end, up from 10,581 in 2000.
Also moving up the list was retail king Wal-Mart Stores Inc., whose stock rallied 8% in 2001. It ranked as the No. 8 stock with clubs, up from No. 12 a year earlier.
Among other “old economy” names gaining popularity, Johnson & Johnson climbed to No. 12 from No. 19 in 2000, Citigroup Inc. surged to No. 20 from No. 38, and fast-food giant Tricon Global Restaurants Inc. advanced to No. 23 from No. 33.
Even so, many clubs appear to have kept faith in major technology stocks, said Kenneth Janke, chairman of the NAIC. Intel Corp., Cisco Systems Inc. and Microsoft Corp. stayed in the top 10 even as the number of clubs owning the stocks declined.
“The emphasis is still on tech,” Janke said. “Our members tend to be long-term investors who are slow to sell stocks.”
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Top 10 Club Stocks
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