Fearful Stocks for Greedy Investors

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"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Of all the Oracle of Omaha's orations, this one holds a special place in Foolish investors' hearts. When looking to bag a bargain, a panicked sell-off by jittery investors offers you a great chance to snap up stocks on the cheap.

In the short term, professional traders' pessimism can become a self-fulfilling prophecy. Desperate institutions lower their asking prices to get rid of a stock, prompting buyers' bid prices to fall in tandem, creating the very price decline that both sides feared in the first place -- until the selling stops.

Until it does, savvy investors can "get greedy," snapping up bargains from these fearful sellers. (Assuming they really are bargains.) In today's column, we'll see which stocks Wall Street's motivated sellers are most frantic to unload. Once we've compiled this shopping list of potential picks, we'll check them against the collective intelligence of Motley Fool CAPS.

Today's contenders include:

Stock	Recent Price	CAPS Rating (out of 5)
Allied Irish Banks (NYSE: AIB)	$5.02	****
Bank of Ireland	$9.48	***
NVE Corp (Nasdaq: NVEC)	$36.74	**
US Airways  (NYSE: LCC)	$2.91	*
MBIA	$3.95	*

Companies are selected from the "Institutional Ownership Down Last Month" list published on MSN Money on the Saturday following close of trading last week. Recent price provided by Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

Up on Wall Street, the pinstripe-and-wingtip crowd can't sell these stocks fast enough. And they may be right. Down here on Main Street, we've given these same stocks a lookover, and we sure don't like what we see. Debt and losses at MBIA and US Airways -- what's there to like about that?

Seriously -- that's not a rhetorical question today, because as it turns out, CAPS members' top-ranked stock has no profit in the trailing twelve months either.

The bull case for Allied Irish Banks
Why invest in the notorious Allied Irish? The first arugment comes from expatbint, who argues that the "Irish Gov. can't let this one slide into oblivion." Call it a Celtic variant on "too big too fail."

And expatbint may be right. Because as Gonzhouse informs us, just like TARP here at home, Ireland's own "bad-asset program-NAMA-will relieve [Allied Irish] of toxic waste at less than 30% hit. [Allied Irish] is going back to capital markets and they are getting a warm reception. It won't be too long before dividend is reinstated."

With a little help from NAMA, CAPS All-Star rxmichigan believes that "this bank has seen the worst and will begin to improvefrom here out. Again out of the US economy so I can play the value the euro over the Dollar over the next 5 years. That alone may outpace the S&P average."

But is it enough to justify buying a profitless bank? Moreover, a bank located in a foreign land, where you lack firsthand knowledge of the company, don't know what customers think of it, where really, you're flying blind, with only "the numbers" to guide you?

Depends on the numbers
If the stock looks cheap enough, maybe it is worth taking a flyer. And in Allied Irish's case, the numbers are pretty high -- and pretty darn low. See how the Irish banker compares to a few of our Stateside brand-name banks:

Stock	Return on Assets*	Return on Equity*	Current Price-to-Tangible Book Value
Allied Irish	1%	12%	0.2
Bank of America (NYSE: BAC)	1.2%	15%	1.3
Citigroup (NYSE: C)	0.9%	12%	0.9
JPMorgan Chase (NYSE: JPM)	0.7%	10%	1.7
Wells Fargo (NYSE: WFC)	1.5%	16%	1.9

*Average over the last 10 years. Data courtesy of Capital IQ, a division of Standard & Poor's.

So relative to its U.S. peers, Allied Irish sports returns on assets and equity roughly in the middle of the pack -- but a price tantalizingly low relative to its tangible book value. To me, that looks like a bargain.

Time to chime in
Of course, that's just my opinion. And I must admit that I'm the farthest thing from a banking expert ... but maybe you are?

I'm betting a few of you Fool readers out there know a whole lot more than I do about banks and their relative merits. And I'm hoping that you'll take a moment now to tell us what you think about Allied Irish. If you can spare the time, click this link, and tell us what you think.

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