contrarian investing posts
FeedPosted Dec 13th 2010 12:00PM by Sheldon Liber (RSS feed)
Filed under: International Markets, Forecasts, General Electric (GE), Citigroup Inc. (C), Bank of America (BAC), Goldman Sachs Group (GS), BP p.l.c. ADS (BP), Bargain Stocks, Chasing Value™, S and P 500, Stock Picks, Transocean Ltd. (RIG)
In the middle of the summer with the stock market smoldering from the economic aftershocks of the BP (BP) oil spill, I decided to post a contrarian story emphasizing a very common refrain among value investors, "my pal Warren" being head of the class: buy on fear (sell on greed). This notion is continuing to work for what I called the toxic stock portfolio.
This is the third update to my ranting five months ago that six of the most reviled and most highly traded stocks featured by daily bad press as a group would outperform the overall market. It has, with the big winner rising from being one of the biggest losers.
Continue reading Chasing Value: Toxic Stock Update #3 -- BAC, BP, C, GE, GS, RIG
Posted May 26th 2010 9:00AM by Mark Fightmaster (RSS feed)
Filed under: ETF Investing, Financial Crisis

Tuesday was quite a day in the stock market. The Dow Jones dropped more than 200 points, but rebounded to finish the day a mere 23 points lower. The action could have given traders whiplash -- but it could also have given contrarians the chance to make a few well-timed investments and rake in some cash.
By definition, a contrarian investor makes investments based on the sentiment of the majority of investors. Yesterday set up a great contrarian bullish opportunity as experts and investors alike felt the sky was falling, pushing the Dow Jones Industrial Average to an intra-day nadir in the 9,800 region.
Continue reading Contrarian Investing and Large Drops, Profitable or Wreckless?
Posted Jan 6th 2010 8:00AM by Steven Halpern (RSS feed)
Filed under: Newsletters, Stocks to Buy, AOL (AOL), Best Stocks for 2010
This post is part of a special report, Top Picks for 2010, the 27th annual survey in which TheStockAdvisors.com asks the nation's leading advisors for their single favorite stock for the new year. See all 80 stocks listed here.
"AOL (AOL), formerly America Online, is one of the most storied -- and bloodied -- names in the Internet sector," says Bernie Schaeffer.
Referring to skepticism surrounding its early December spin-off from Time Warner, the editor of Schaeffer's Investment Research chooses AOL as his top pick for 2010, noting, "From a contrarian perspective, the current pessimism could have positive implications."
Continue reading Top Picks for 2010: AOL (AOL)
Posted Dec 29th 2009 5:40PM by Sheldon Liber (RSS feed)
Filed under: Other Issues, Berkshire Hathaway (BRK.A), Chasing Value™, Stocks to Buy, Financial Crisis, Grubb and Ellis Co (GBE)

Where as my fist pick, Berkshire Hathaway (
BRK.B) is a large cap diversified conglomerate, my second, Grubb & Ellis Co. (
GBE), is a micro-cap stock of $90 million.
GBE is a network of nearly 130 owned and affiliated offices, providing commercial real estate services to property owners, institutional investors, and tenants. Its 1,800 brokers and some 6,000 affiliated real estate professionals offer advisory and brokerage, property management, construction consultation, and other services.
The company has been devastated by the bursting of the residential real estate market bubble, lost equity value, illiquid capital markets and the still impending concern over the commercial real estate market facing rising vacancies as hundreds of billions of dollars in loans must be rolled over.
Continue reading Chasing Value: 2010 -- #2 Grubb & Ellis
Posted Feb 18th 2009 12:55PM by Sheldon Liber (RSS feed)
Filed under: Forecasts, Other Issues, Rants and Raves, Competitive Strategy, General Electric (GE), Berkshire Hathaway (BRK.A), Johnson and Johnson (JNJ), Tiffany and Co (TIF), Goldman Sachs Group (GS), Procter and Gamble (PG), Harley-Davidson (HOG), Recession, Financial Crisis
Continue reading Buffett says buy, then sells, Roubini says wait -- what's an investor to do?
Posted Jan 12th 2009 10:00AM by Steven Halpern (RSS feed)
Filed under: Best Stocks for 2009
This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
"My top pick for 2009, Hertz Global Holdings (NYSE: HTZ) is a very contrarian idea in one of the most beaten down sectors," states Glenn Cutler.
In his Stock Market Blog and Special Situations Report, the advisor says, "Hertz Global -- the world's largest car rental brand -- has over 8,000 locations in 144 countries.
"They are #1 at airports with corporate and licensee locations in North America, Europe, Latin America, Australia, and New Zealand and additional licensee operations in cities and airports in Africa, Asia, and the Middle East.
"Through Hertz Equipment Rental Corporation unit, the company operates one of the largest equipment rental businesses for a diverse line of customers ranging from major industrial companies to local contractors to consumers with over 350 branch locations in the U.S., Canada, China, France, and Spain.
Continue reading Top Stock Picks '09: Hertz (HTZ)
Posted Nov 25th 2008 2:25PM by Steven Halpern (RSS feed)
Filed under: International Markets, Newsletters, Commodities, Stocks to Buy
"Among contrarians, one advisors stands out among all others: David Dreman," notes John Reese, editor of the Validea newsletter.
His advisory service selects stocks based on the strategies of time-tested investors, he reviews Dreman's approach and offers one stock that matches the contrarian's investment profile -- specialty metals firm, Allegheny Technologies (NYSE: ATI).
"Dreman, perhaps more than any other guru I follow, is a student of investor psychology. And at the core of his research is the belief that investors tend to overvalue the 'best' stocks -- those 'hot' stocks everyone seems to be buying -- and undervalue the 'worst' stocks -- those that people are avoiding like the plague.
"In addition, he also believed that the market was driven largely by how investors reacted to 'surprises', frequent events that include earnings reports that exceed or fall short of expectations, government actions, or news about new products.
"And, he believed that analysts were more often than not wrong about their earnings forecasts, which leads to a lot of these surprises. By taking a contrarian approach -- i.e. targeting out-of-favor stocks and avoiding in-favor stocks -- Dreman found you could make a killing.
"To find out-of-favor potential turnarounds, he compared a stock's price to four fundamentals: earnings, cash flow, book value, and dividend yield. Because Dreman took advantage of the overreactions of others, he found that one of the best times to invest was during a crisis.
"Allegheny Technologies is a diversified specialty metals producer; its metals are selected for use in environments that demand metals having hardness, toughness, strength, resistance to heat, corrosion or abrasion, or a combination of these characteristics.
Continue reading Allegheny Technologies (ATI): A 'Dreman style' contrarian buy
Posted Sep 2nd 2008 11:00AM by Steven Halpern (RSS feed)
Filed under: Newsletters, Bargain Stocks, Stocks to Buy
"At the Morningstar Investment Conference, I had a chance to hear directly from manager of several of our 'best buy' funds," says fund expert Mark Salzinger.
In his The No-Load Fund Investor, he discusses a pair of "contrarian" funds: Dodge & Cox Stock (DODGX) and T. Rowe Price Equity Income (PRFDX) recommended for long-term investors.
Salzinger explains, "The managements of these equity funds are sticking to its guns. In the case of Dodge & Cox Stock, this means a continuation of a contrarian focus on large out-of-favor stocks. often in equally out-of-favor sectors.
"In the case of T. Rowe Price Equity Income, this means a continuation of focus on high quality companies that appear historically cheap based on various levels of valuation, including their dividend yield relative to the market.
"Charles Pohl, the chief investment officer of Dodge & Cox and a member of the portfolio management team on DODGX, spoke strongly about what he considers to be the attractive opportunities in financials now that the sector is so out of favor.
"He says that the Dodge & Cox team is focusing on intense analysis of companies within subsets of the financial services industry, looking for stocks that have been beaten down with their peers despite superior operations, including safer historical underwriting standards.
Continue reading Best buys among contrarian funds
Posted Aug 27th 2008 1:40PM by Steven Halpern (RSS feed)
Filed under: International Markets, Newsletters, Commodities, Oil, Stocks to Buy
"We are moving headlong into oil," notes John Reese, who analyzes stocks based on the criteria used by "legendary" investors such as Buffett, Graham and Lynch.
In his Validea newsletter, he says, "My fundamental models indicate that the oil industry is where the best values in the market are." Here's a look at W&T Offshore (NYSE: WTI), which is based on the criteria used by contrarian David Dreman.
"The economy and stock market have gone through a legitimate crisis because of the credit woes, and it takes time for something like that to work itself out.
"But the important thing to remember is that we've been through financial crises before -- even bad-debt financial crises like this one -- and the market has always stabilized and then pushed higher.
"And history has shown that those who can stick with the stock market through down times like these will be rewarded.
"David Dreman -- one of the gurus I base my strategies on -- notes in his recent Forbes column, 'If you pack up now, chances are you'll miss a good part of the next bull market. A large part of the gains are always made in the first few months of one, when market-timing investors are still on the sidelines.'
Continue reading W&T Offshore (WTI): Drilling with David Dreman
Posted Aug 2nd 2008 11:40AM by Zac Bissonnette (RSS feed)
Filed under: Deals
New data from Dealogic shows that July was the fifth straight month of growth in U.S. mergers and acquisitions activity -- and the highest total since a year ago.
But it's not quite as good as it looks. The data is skewed upward by foreign bids for American companies like Genentech (NYSE: DNA) and Anheuser-Busch (NYSE: BUD) and, according to the Associated Press, "the rise in M&A ... more likely reflects foreign companies taking advantage of the weak dollar than it does a loosening of credit."
But from an investors' perspective, the cause of the increase probably doesn't really matter. Deep value investors like Mohnish Pabrai have been struggling to post strong returns of late, in part because the private equity funds that could be relied on to buy undervalued companies a couple years ago have brought their U.S.-based activity to a hault.
But now the foreign companies and sovereign wealth funds are in the game and, from an investors' perspective, that's just as good -- whoever will buy undervalued public companies at a premium will boost returns. The low price-book, low price/earnings, contrarian investment strategies that haven't worked lately could be ready to start working again, just as they have historically.
Posted Jul 22nd 2008 4:43PM by Aaron Katsman (RSS feed)
Filed under: Earnings Reports, Good news, Apple Inc (AAPL), Texas Instruments (TXN), Technology, Earnings Transcripts
So the sky isn't falling.
Corporate earnings aren't that bad and are surprising analysts. Oil prices are falling just as quickly as they rose. If you are a contrarian investor, you must have a big grin on your face.
Common wisdom had it that markets were going to keep dropping, that the price of crude would hit $200 a barrel, and that bank after bank would go bankrupt. But what's happened? The opposite. Bank earnings aren't as bad a feared, crude has fallen to under $130 and suddenly investors are a bit more optimistic.
Even when we get bad news, like earnings from Apple (NASDAQ: AAPL), Texas Instruments (NYSE: TXN) and others, the market is able to hold up. Industries that just a week ago were being left for dead suddenly came roaring back to life. For investors who like to dabble in out of favor stocks, this market is a dream come true. Battered sectors such as financials, airlines, and even autos have surged over the last week. Who would have dreamed that airline stocks would actually stage a rally? What's interesting is that even with their recent move these sectors are all still trading significantly off their highs, meaning that potentially we have much more room to run.
Continue reading This is setting up to be a contrarian's dream market
Next Page >