Contrarian Ideas: Beaten Up Stocks Being Snapped Up by Insiders

Generally speaking, most investors prefer to go with the flow when it comes to their trades -- they'll flock to stocks on a rally, and can't unload declining shares fast enough. Then there are the contrarians. Their investment strategy is simple: take a look at how the crowd is trending, and use it as a cue to go the opposite direction.

Here's why: Excessive pessimism around a stock can push its share price below "actual" fair market value. In order to turn a profit off these depressed stocks, contrarians just have to wait for the market to correct, as they assume it will. These undervalued stocks can make for great bargains, if you're willing to take on the risk.

That said, stocks seeing overly bearish sentiment don't necessarily carry a great deal of risk anyway, as most of the negative news may already be factored in. If investors are already bracing themselves for the worst, gloomy reports won't pack much of a punch. But on the other hand, an unexpected piece of good news can have a major positive impact on a stock's price.

Willing to bet against the crowd? Here's a list of stocks that have been dumped by investors over the last quarter of 2010.

Is the market overreacting? Insider executives seem to think so -- all of these stocks have seen insider buying over the last three months. These companies management teams are expecting the best for their firms in 2011 -- what do you think? (Click here to access free, interactive tools to analyze these ideas.)

Insider trading data sourced from AOL Money. The list has been sorted by quarterly performance.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.         

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.