Recently, we ran across a list of stocks provided by InsiderMonkey.com that have been beaten up over the past year, yet have favorable analyst ratings and are being bought up by many of the top hedge funds in the world. Not only have these companies been punished the past year, they have also delivered negative returns so far in 2011.
Insider Monkey has made a name for itself by following the transactions of some of the best hedge funds in the world. The website's many studies have shown the benefit of following the best hedge fund gurus in the market. Much like in our own "Guru Report Card," we will also analyze the list of Insider Monkey's 27 out of favor "insider stocks" based on AFG's valuation model. Our model utilizes the Economic Margin methodology we developed, which has also proven to help our readers choose the most attractive investment opportunities. The chart below illustrates how well our valuation metric has worked over time at identifying winners and losers within the Russell 1000 index.
The list below contains Insider Monkey's 27 out of favor "insider stocks" – companies with negative returns over the past 12 months that analysts (according to Bloomberg) believe are undervalued and are also owned by many highly rated hedge fund managers. This list also includes an investment rating provided by AFG that is focused primarily on valuation.