Seeking Alpha
Value, growth, long-term horizon, medium-term horizon
Profile| Send Message|
( followers)  

If you are interested in potentially underestimated stocks, here is a list that may give some interesting ideas.

We ran a screen on stocks that are being targeted by short sellers, with short floats above 15%, and that are also technically oversold (with RSI(14) below 40).

Next we screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think hedge funds are calling it right on these names? Use this list as a starting point for your own analysis.

List sorted by RSI(14).

1. USANA Health Sciences Inc. (NYSE:USNA): Develops, manufactures, distributes, and sells nutritional and personal care products worldwide. Market cap at $551.66M, most recent closing price at $38.23. Net institutional purchases in the current quarter at 1.4M shares, which represents about 21.94% of the company's float of 6.38M shares.

RSI (14) at 27, and short float at 60.36%. As of September 29th, 2012, the top 2 holders of the stock are LSV Asset Management (3.4%), and Renaissance Technologies (3%).

2. Sturm, Ruger & Co. Inc. (NYSE:RGR): Engages in the design, manufacture, and sale of firearms in the United States. Market cap at $843.04M, most recent closing price at $44.0. Net institutional purchases in the current quarter at 1.7M shares, which represents about 9.18% of the company's float of 18.52M shares.

RSI (14) at 28, and short float at 48%. As of September 30th, 2012, the top 2 holders are London Company of Virginia (7.24%), and Allianz Asset Management AG (7.16%).

3. Smith & Wesson Holding Corporation (NASDAQ:SWHC): Offers metal processing services and manufactures firearms and handcuffs as well as apparel and sportsmen's articles. Market cap at $573.81M, most recent closing price at $8.66. Net institutional purchases in the current quarter at 5.6M shares, which represents about 9.11% of the company's float of 61.48M shares.

RSI (14) at 28.68, and short float at 17.57%. As of September 30th, 2012, the top 2 holders of the stock are the Vanguard Group (6.3%), and Renaissance Technologies (5.12%).

4. GT Advanced Technologies Inc. (NASDAQ:GTAT): Provides polysilicon production technology and multicrystalline ingot growth systems, and related photovoltaic (PV) manufacturing services for the solar industry worldwide. Market cap at $411.77M, most recent closing price at $3.46. Net institutional purchases in the current quarter at 18.1M shares, which represents about 15.36% of the company's float of 117.86M shares.

RSI (14) at 33.21, and short float at 31.85%. As of September 30th, 2012, the top 2 holders of the stock are Wellington Management (8%), and UBS AG (6.93%).

5. Merge Healthcare Incorporated (NASDAQ:MRGE): Provides health information technology interoperability solutions. Market cap at $254.19M, most recent closing price at $2.73. Net institutional purchases in the current quarter at 4.8M shares, which represents about 6.37% of the company's float of 75.35M shares.

RSI (14) at 39.64, and short float at 18.49%. As of September 29th, 2012, the top 2 holders of the stock are TCW Group (8.5%), and Northpointe Capital (5.44%).

*Institutional data sourced from Fidelity, all other data sourced from Finviz.


Source: Hedge Funds Are Buying These 5 Highly-Shorted And Oversold Stocks