"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:


Recent Price

CAPS Rating

(out of 5):

Hercules Technology Growth Capital (NASDAQ:HTGC)






US Airways Group (NYSE:LCC)



Delta Air Lines  (NYSE:DAL)






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.

Ugh. As in, it's getting ugh-ly out there, folks. With our economy teetering on the brink, Wall Street bankers are selling some of the biggest names in American capitalism. Worst of all, they're probably right to do so.

At least, that's what CAPS investors seem to think. They've assigned dismal ratings to four of Wall Street's least-fave five this week. But amid all the carnage, one name strikes a blow for optimism, as our stock-rating community gives a big thumbs-up to Hercules Technology Growth Capital.

The bull case for Hercules Technology Growth Capital
If you've never heard of this company, well, I can't blame you. Neither had I. Yahoo! Finance hardly admits its existence. Seriously -- if you check out the page they've built for Hercules Tech, you'll find no data on the stock's "key statistics," and little information on what it does. So let me fill you in:

Much like the "business development companies" we discussed last week -- Blackstone (NYSE:BX), Allied Capital (NYSE:ALD), and Apollo Investment Corporation, to name a few -- Hercules is in the "business business." Its reason for being is, simply put, to help bring other businesses into being. As for the reasons to invest in it:

  • PicoTrader calls Hercules Tech a "good company, good earnings, great dividend, and undervalued, next."
  • SaureusNola, too, is attracted by the stock's "[g]ood dividend yields."
  • CAPS member viconquest says: "I trust these smart VCs to do the work for me, even in this downturn."

Personally, though, I like to verify before trusting. So I did a little digging into the data that Yahoo! Finance doesn't provide us, instead using the Fool's prime data supplier, Capital IQ. What I found there looks intriguing, to say the least.

According to Capital IQ, this little venture capitalist comes with a $133 million price tag on its stock. It earned $21 million in profit over the past 12 months (giving it a trailing P/E of 6.3), and grew its revenue 41% in the midst of one of the nastiest business environments it's ever been our displeasure to live through.

To top it all off, Hercules pays its shareholders a monster 30% dividend yield. While that's probably not sustainable, it works out to $1.36 per share, or more than twice what the firm earned last year. Indeed, the company's most recent dividend announcement indicated that it will pay cash and shares in lieu of just cash, in order to maintain its balance sheet in a tough environment.

What's more, even without any dividend at all, the stock's valuation entices. Hercules Tech claims to have $11.56 per share in tangible book value, or nearly three times what the shares fetch on the open market.

Time to chime in
Now, as I've said before, I'm hardly the world's leading expert in BDCs. So far as I can tell, Hercules Tech appears to have the hallmarks of a winning investment: superb growth rates, and a low price relative to its intrinsic worth. But that's just my opinion.

What's yours?

Apollo Investment is a Motley Fool Income Investor recommendation.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 558 out of more than 125,000 members. The Fool has a disclosure policy.