"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
|
|---|---|---|
|
Nomura Holdings |
$6.15 |
**** |
|
Sequenom |
$3.08 |
*** |
|
Navistar International |
$35.75 |
** |
|
STEC |
$26.77 |
** |
|
Vical Inc |
$3.90 |
** |
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.
Traders are dumping these stocks up on Wall Street. And if truth be told, we're not too keen on their prospects down here on Main Street, either. One stock that bucks the trend, though, is Japanese investment banker Nomura Holdings.
Why do Fools love it? Let's count the ways.
The bull case for Nomura Holdings
It's been more than a year since CAPS All-Star chk999longonly began musing that "Japanese stocks are severely undervalued," and highlighted Nomura as a "Premium Japanese company."
So far, the market seems to disagree, but japanbull argues that with a: "Strong Currency ... Low Exposure to Sub-Prime ... High savings rate ... [and a] Deflationary economy showing sings of ending," Japanese stocks are "ready for takeoff!!" Which is all well and good for Japan in general -- but why should investors look at Nomura in particular? sajinor explains that this: "stock has tanked after this latest SPO, but it is set for a rebound. The income from this SPO puts it in a good position to come back, and you can now buy in from this offering caused dive."
"SPO," by the way, refers to Nomura plan to conduct a secondary public offering -- in other words, to sell stock and raise $5.6 billion in cash. Nomura says the additional cash will help bolster its balance sheet and fund future acquisitions in the weakened global banking sector. Domestically, Nomura plans on upgrading its IT infrastructure and promote its network of branches. Wall Street, however, seems more concerned with the fact that the offering will dilute existing shareholders by some 30%.
As sajinor points out, whatever effect this has on current shareholders, fear surrounding the SPO has given new investors a chance to buy Nomura at a lower price. But should they?
Well, let's compare it to a few of its more familiar banking peers. Nomura now sells for a cheaper price-to-book value ratio than either JP Morgan
Personally, I just don't see the attraction.
Time to chime in
Of course, that's just my opinion -- and in all honesty, folks, I'm the furthest thing from a banking specialist. Certainly there are investors out there with more skills at picking apart bankers' books than I possess.
So what do you say, folks? If you've got insight into Nomura, here's your chance to shine. Click on over to Motley Fool CAPS now, and tell us if what you see has you feeling fearful or greedy.
