A Contrarian Shopping List

"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" in order 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'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:

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 they truly are bargains). Which of the above seven stocks fits the bill? In today's list, we see three instances in which Main Street agrees with Wall Street and one in which they think the professionals are overreacting -- but three more cases where CAPS players say the professionals are just flat-out wrong.

Wrong about what, you ask? The argument appears to center on whether one year's mild winter means the nation's thirst for energy in general, and coal in particular, has been eternally quenched. Nearly half the stocks on today's list come from the coal sector, which has been running hot for years. One of those stocks, Arch Coal, continues to receive the highest rating from CAPS players, despite getting the back of Wall Street's hand. Let's see what our raters have to say about it:

• gldmn1and2 explains that the reason Arch's stock is on the wane is "oil price reductions," plain and simple.
  
  
• CAPS all-star gtowings adds that "prices for coal and natural gas, a competing fuel for power generation, have declined" recently in tandem, but argues that "many of [Arch's] contracts expire soon and . . . many of its new contracts call for prices of up to 25% more than those in the pacts they're replacing. Utilities plan to add 30% to the U.S.'s coal-fired electricity capacity in the next few years, so demand for low-sulfur steam coal, which Arch produces, should accelerate."

Out of the 137 investors who have rated Arch, the vast majority are similarly bullish on the stock. But although seven (count 'em, seven) CAPS players disagree, saying Arch will underperform the market, not one has yet put those reservations into words. Can you tell us why gldmn1and2 and gtowings might be wrong, and Wall Street right? Conversely, do you agree with them that the Street's pessimism is overblown? Either way, come on over to CAPS and tell us what you think about Arch -- or any of the other stocks on today's list.

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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 148 out of more than 19,500 raters. The Fool has a disclosure policy.