Do you consider yourself a contrarian investor? For ideas on how to start your own contrarian search, we ran a screen.
We began by screening the small-cap sector for stocks with bearish sentiment, with float shorts above 10%.
We then screened these names for those with the confidence of their company insiders, such as members of the board and upper management, with significant net insider purchases over the last six months representing close to 2% of share float or higher. Since most companies only have a handful of company insiders, net insider purchases representing 2% of share float is a big show of confidence in their employer's prospects.
We then narrowed down the list farther by looking for significant net institutional buying in the current quarter. It's a sign that "smart money" investors like hedge funds are also optimistic about these names.
We were left with two names, which we list in detail below.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
Do you think these companies deserve to be so highly shorted? Use the list below as a starting point for your analysis.
1. Basic Energy Services, Inc. (NYSE:BAS): Provides a range of well site services to oil and gas drilling and producing companies in the United States. Market cap at $491.49M, most recent closing price at $11.68. Net institutional purchases in the current quarter at 2.7M shares, which represents about 7.26% of the company's float of 37.21M shares. Over the last six months, insiders were net buyers of 389,570 shares, which represents about 1.05% of the company's 37.21M share float. The top 2 institutional holders of the stock are Credit Suisse AG, and Blackrock Advisors.
2. Infinity Pharmaceuticals, Inc. (NASDAQ:INFI): Engages in the discovery and development of medicines for the treatment of cancer and other conditions in the United States. Market cap at $1.35B, most recent closing price at $34.27. Net institutional purchases in the current quarter at 8.7M shares, which represents about 33.41% of the company's float of 26.04M shares. Over the last six months, insiders were net buyers of 5,158,726 shares, which represents about 19.81% of the company's 26.04M share float. The top 2 institutional holders of the stock are FMR, LLC, and Perceptive Advisors.
*Insider data sourced from Yahoo! Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Sabina Bhatia, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.