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

Of all of the Oracle of Omaha's orations, this one holds a special place in Foolish investors' hearts. When you're looking to bag a bargain, a panicked sell-off among jittery investors offers you a great chance to grab 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. Buyers' bid prices then fall in tandem and create the very price decline that both sides feared in the first place -- until the selling stops.

Until it does stop, savvy investors can get greedy and snap 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 contrarian picks, we'll check them against the collective intelligence of Motley Fool CAPS.

Today's contenders include:


Recent Price

CAPS Rating (out of 5):

MF Global (NYSE:MF)



American Axle  (NYSE:AXL)



MGIC Investment  (NYSE:MTG)






Pier 1 Imports  (NYSE:PIR)



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 from Yahoo! Finance. CAPS ratings from Motley Fool CAPS.

One word sums up investors' mood this week, after last week's thrashing: "ugly." A few of us are gleeful about the bargains popping up, but most investors are feeling downright revolted at how we got to this point.

Reviewing the carnage among the stocks Wall Street has been dumping, we find no one wanting to touch anything having the slightest whiff of relation to finance, housing, or autos. And as you can see, we're fresh out of contrarian picks -- fear, and low ratings, reign supreme.

Lacking any out-and-out buy sentiment, therefore, we'll have to make do this week with reviewing the least-loathed stock on our list. That would be none other than the perfectly named Motley Fool Global Gains pick "MF Global."

The bull case for MF Global
PatienceGrasshpr introduced us to MFG back in September:

This company makes derivatives trades happen for clients all over the world. I think it's a play on international markets and on complex financial transactions, both of which seem to be growing more and more popular. I think folks will come to rely on this company to make money, and that will prove very profitable for them.

According to CAPS All-Star Stumblebee, writing back in October, this means that MFG "will make money whether the markets go up or down, so long as trading volume continues."

And fellow All-Star metoo105 agrees that volume is key to this business:

If you think about it, brokerage is a business that should tend toward monopoly, b/c of the economies of scale available in the business. ... MF Global is a leader in certain markets and will likely stay in that position despite the rocky past few months. In the next year, business will rebound and continue its rapid growth.

So if MFG's the best game in town, and growing into a monopoly in the derivatives market as our players suggest, why has the stock been so absolutely crushed? Fellow Fool Alex Dumortier describes the company's issues better than I ever could, and he sketches out MFG's place in the world relative to giants such as Citigroup (NYSE:C) and Goldman Sachs (NYSE:GS). If you're looking for a quick autopsy on what's gone wrong with MFG, look no further than this article: "MF's Global Meltdown."

Time to chime in
Investors aren't at all happy with MFG of late. To buy into this one, you must be more than just a contrarian by nature -- you may need an honest-to-goodness masochistic streak while we wait for the global financial system to sort itself out. But even then, when all is said and done, will MF Global reward investors? Here's your chance to tell us what you think.

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