Berkshire Hathaway Inc. (BRK.A), The AES Corporation (AES): The S&P 500 (.INX)’s 5 Most Loved Stocks

Why are short-sellers avoiding Loews?

• Not to be confused with the home improvement retailer, Loews Corporation (NYSE:L) is a commercial property and casualty insurance company. As you might imagine, unless you have a crystal ball that can predict disasters, insurance companies are rarely strong short-sale candidates, since they can adjust premiums higher to offset unprofitable policies.

Do investors have a reason to worry?

• Based on Loews Corporation (NYSE:L)’ first-quarter results announced this week, optimists’ thesis is certainly being tested. Net income dropped 34% relating to catastrophe losses from Superstorm Sandy, as well as a myriad of other one-time charges. However, insurance companies have a knack for turning a profit and using catastrophes as the justification for raising their premiums. With this company still valued $4.25 below book, I doubt current shareholders have too much to worry about.

Why are short-sellers avoiding Marsh & McLennan Companies, Inc. (NYSE:MMC)?

• I believe the primary reason short-sellers are keeping their distance from Marsh & McLennan Companies, Inc. (NYSE:MMC) is the company’s incredible consistency. The professional services firm consistently delivers revenue growth in the 4%-5% range and, in its first-quarter results reported this week, delivered 16% growth in adjusted operating income. With demonstrable growth in North America as well as overseas, shorts-sellers have been kept at bay.

Do investors have a reason to worry?

• Shareholders probably have little to worry about in the way of short-sellers here. Marsh & McLennan Companies, Inc. (NYSE:MMC)’s business tends to be tied to the overall health of the economy; so unless things go sour rather quickly, it should be fine. In addition, short-sellers often love the allure of the “quick buck.” With Marsh & McLennan Companies, Inc. (NYSE:MMC) sporting a low beta of 0.74, it isn’t exactly a volatile stock and will normally stay off most short-sellers’ radars on that accord alone.

The article The S&P 500’s 5 Most Loved Stocks originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of, and recommends, Berkshire Hathaway and Loews. It also recommends Precision Castparts.

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