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.

Company

Performance Over Last Quarter

Insider Trends

Sterling Financial (Nasdaq: STSA)

-69.06%

Insiders like Ezra Eckhardt (Officer), Thomas Colosimo (Officer), and John Gregory Seibly (Director) collectively bought $392,148 worth of stock between 11/16-12/15

Atlantic Tele-Network (Nasdaq: ATNI)

-20.80%

Brian Schuchman (Director) bought $356,148 worth of stock between 11/17-12/3

NuVasive (Nasdaq: NUVA)

-19.94%

Richard Treharne III (Director) bought $94,300 worth of stock on 12/14

CKX (Nasdaq: CKXE)

-17.30%

Jacques Kerrest (Director) bought $200,300 worth of stock between 11/10-11/12

Titanium Metals (NYSE: TIE)

-14.39%

Harold Simmons (Chairman) bought $265,494 worth of stock on 12/10

Central European Media Enterprises (Nasdaq: CETV)

-12.40%

Egnaro Investments (10% Owner) bought $15.05M worth of shares on 11/23, while David Sach (CFO) bought $598,713 worth of stock on 11/15

Strayer Education (Nasdaq: STRA)

-8.37%

Insiders like Robert Grusky (Director) and Todd Milano (Director) collectively bought $90,990 worth of stock between 10/29 - 11/4

Globalstar (Nasdaq: GSAT)

-7.45%

James Monroe III (Chairman) bought $235,200 worth of stock between 12/20 - 12/23

China Medical Technologies (Nasdaq: CMED)

-6.88%

Takyung Tsang (CFO) bought 187,780 worth of stock on 12/16

Intuitive Surgical (Nasdaq: ISRG)

-5.03%

Amal Johnson (Director) bought $250,186 worth of stock on 11/19

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.

Intuitive Surgical is a Motley Fool Rule Breakers pick. Titanium Metals is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.