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If you're interested in contrarian ideas, the following list might offer an interesting starting point for your own analysis.

To create this list, we started with a universe of about 200 micro-cap stocks (market caps between $100M - $300M). From this list, we collected data on institutional money flows and short seller trends.

All of the stocks mentioned below have seen a significant increase in shares shorted over the last month. In addition, all of these companies have been dumped by big money managers during the current quarter.

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.



Sophisticated investors, like short sellers and hedge fund managers, think these stocks are in trouble - is this extreme pessimism justified?

List sorted by trading volume.

1. Radian Group Inc. (NYSE:RDN): Provides credit-related insurance coverage and financial services in the United States and internationally. Market cap of $266.42M. Net institutional sales in the current quarter at -12.7M shares, which represents about 9.61% of the company's float of 132.11M shares. Shares shorted have increased from 18.92M to 20.97M over the last month, an increase which represents about 1.55% of the company's float of 132.11M shares.

2. Beazer Homes USA Inc. (NYSE:BZH):
Designs, builds, and sells single-family and multi-family homes in the United States. Market cap of $109.74M. Net institutional sales in the current quarter at -4.0M shares, which represents about 6.9% of the company's float of 58.00M shares. Shares shorted have increased from 13.67M to 14.67M over the last month, an increase which represents about 1.72% of the company's float of 58.00M shares.

3. ReneSola Ltd. (NYSE:SOL):
Engages in the manufacture and sale of solar wafers and solar power products. Market cap of $134.62M. Net institutional sales in the current quarter at -3.6M shares, which represents about 5.94% of the company's float of 60.63M shares. Shares shorted have increased from 7.52M to 8.23M over the last month, an increase which represents about 1.17% of the company's float of 60.63M shares.

4. MELA Sciences, Inc. (NASDAQ:MELA): Market cap of $116.95M. Net institutional sales in the current quarter at -2.2M shares, which represents about 8.86% of the company's float of 24.84M shares. Shares shorted have increased from 2.95M to 3.88M over the last month, an increase which represents about 3.74% of the company's float of 24.84M shares.

5. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA): Focuses on discovering, developing, and commercializing oral drugs in the therapeutic areas of cardiovascular, central nervous system, inflammatory, and metabolic diseases. Market cap of $189.75M. Net institutional sales in the current quarter at -12.8M shares, which represents about 8.84% of the company's float of 144.74M shares. Shares shorted have increased from 18.84M to 20.76M over the last month, an increase which represents about 1.33% of the company's float of 144.74M shares.

*Short data sourced from Yahoo! Finance, all other from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 5 Micro-Cap Stocks Dragged Down By Extreme Pessimism