"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Out of the quadrillions of quotations quarried from that most loquacious of quotationists, this one holds a special place in the hearts of Foolish investors. Are you looking to "buy low" so as to later "sell high"? If so, your best chance of getting that initial, low entry price comes when panicked sellers are unloading their shares at whatever price is on offer.

In today's column, we search the ranks of Wall Street's motivated sellers and note which stocks they're most frantic to unload. Therein may lie the makings of a contrarian investor's shopping list. But don't just take my word for it. Before you decide to go in through Wall Street's out door, check your thinking against the collective intelligence of Motley Fool CAPS investors.

Today's contenders include:

Currently Fetching

CAPS Rating (out of 5)




Constar International  (NASDAQ:CNST)



Syntax-Brillian  (NASDAQ:BRLC)



SIGA Technologies  (NASDAQ:SIGA)



MannKind Corp (NASDAQ:MNKD)



Acorda Therapeutics (NASDAQ:ACOR)



Companies are selected from the "Institutional Ownership Down Last Month" list published on MSN Money on the Saturday following close of trading last week. Price decline and current pricing also provided by MSN Money on the same date. CAPS ratings from Motley Fool CAPS.

The problem with pessimism
The problem with going against the grain on Wall Street is that when professional traders get pessimistic, their grim outlook can become a self-fulfilling prophecy -- at least in the short term. The more desperate institutions become to abandon a stock, the lower the price they'll accept to get rid of it. And as their "ask" prices drop, the "bid" prices of buyers will fall in tandem, creating the very price decline they feared in the first place.

Until the selling stops.

In through the out door
When it will stop is anybody's guess. But until it does, savvy investors have a chance to "get greedy" and snap up some bargains from these fearful sellers (if bargains they truly be). This week, investors believe they have found just such a bargain in the stock of wireless "interactive entertainment provider" KongZhong.

The bull case for KongZhong
What exactly is "wireless entertainment," you ask? Cell phone ringtones and "wallpaper," for example. And games you can play on your mobile phone. That kind of high-margin, low-tech stuff is KongZhong's stock in trade. While it doesn't seem to interest Wall Street anymore, CAPS investors still like it a lot -- and they like the company that sells it to Chinese phone gabbers even more. Out of well over 1,000 investors polled, fully 96% think KongZhong will outperform the market. Here's why:

  • waymilky calls KongZhong a "[w]ell-managed wireless services provider punished [recently] due to regulation by the Chinese government of the industry. KONG to lose revenue from [China Mobile (NYSE:CHL)], but current valuation looks like they lost all revenues." Our participant continues: "Expect company to expand non-China Mobile revenue over the next 3 years as they have the resources and the management to make it happen. Currently selling at twice their cash in the bank."
  • BBQPorkMogul points out that this "valuation assumes zero growth, ever." [Actually, he said that back in July of last year -- and the stock's selling for even less today, which I suppose means the stock is now priced for negative growth.]
  • wutangfinancial thinks that's a mistake: "I have no choice but to be long a company that takes a [successful exisiting] product/idea from the west and markets it in the fastest growing economy with protection from outside competitors ..."

Time to chime in
Personally, I think ringtones and wallpaper are pretty frivolous. But "frivolous" and "high-margin" are not necessarily mutually exclusive concepts -- I understand there's a little company by the name of "Tiffany" that does good business hawking sparkly rocks, and pieces of metal with its name inscribed upon them. Throw in KongZhong's P/E of just more than 10, and projected long-term growth rates of about 20% per year, and there's a good argument to be made that KongZhong's stock is undervalued.

If you think you can make that argument as well as, or better than, the Fools quoted above, then come on over to Motley Fool CAPS and give it your best shot. Alternatively, if you see the hawking of ringtones as just too silly to invest in, well, tell us why that's so.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

(Psst! By the way, if you like investing internationally, but are looking for something other than ringtones to put your money to work in, give our newest investment newsletter, Motley Fool Global Gains, a try. A 30-day free trial is yours for the asking.)

Fool contributor Rich Smith does not own shares of any company named above. The Fool's disclosure policy always silences its cell phone before the movie starts.