Fearful Stocks for Greedy Investors

"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 -- and whether you should buy 'em:

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

Time to panic ...
The market, it is a tumblin', and Wall Street traders are verging on full-fledged panic. Last week alone, professional investors sold off the S&P 500 to the tune of 4%, and by all accounts, they're particularly desperate to unload the five stocks named above. 

... or time to get greedy?
In contrast, CAPS members are taking a more nuanced view of the market turmoil. While unconvinced that Sonic's the solution, and not really digging Hecla, Foolish investors see the fire sales going on at A-Power and JA Solar, and are starting to get excited. But the one stock we're most interested in taking off Wall Street's hands is: 

Exelixis
Way back in June, CAPS All-Star italiafool had this one tagged as "a multibagger waiting to happen."

Why? Fellow All-Star gomb0824 boiled the buy thesis down to just five words: "little competition in emerging technology." In fact, although its 10-K filings with the SEC contain multiple allusions to "major pharmaceutical and biotechnology companies" that are "focused on the development of small molecules and antibodies for diseases including cancer and metabolic and cardiovascular disorders" such as Exelixis studies, the company doesn't outright come up with a single, concrete name of anyone doing precisely what it is doing in the field.

But while easily identifiable rivals may be in short supply, tonyrjohnson argues that Exelixis is at no loss for powerful "partners" in its research. The company has secured strategic alliances with marquee names such as Bristol-Myers Squibb (NYSE:BMY), GlaxoSmithKline (NYSE:GSK), and Genentech (NYSE:DNA).

Friends in need, and those with no need at all
Partnerships are good, but if I had a dime for every time I read about a development-stage biotech with lots of partners but no real revenue, I'd ... well, I'd be able to afford a grande latte at Starbucks, easy.

In this regard, Exelixis is a bit of an eye-opener. It may not have a profit yet, but it does have a real business behind its stock ticker. In its latest fiscal year, the company booked nearly $118 million in revenue. Over the past three reported quarters, Exelixis came close to matching that number (some $108 million), and it's on track to exceed it handily.

Even more impressive is the fact that Exelixis already generated positive free cash flow from its business -- but that's largely because of deferred revenue that has come in the door in the last four quarters. With a balance sheet brimming with $180 million in net cash, and a whole host of well-capitalized strategic partners standing ready to support its business, Exelixis is one of those exceedingly rare biotechs about which I have no doubt: This one's a survivor for sure.

Time to chime in
Of course, that's just my opinion. You, on the other hand, are free to disagree. In fact, if you do disagree with me about this company, I'd love to hear why. Click over to Motley Fool CAPS now, and tell us what you think about Exelixis.