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When I was an analyst at the uber-contrarian Avalon Research Group, we only initiated coverage on a stock if our opinion went against the consensus, or if the security was barely (or not at all) followed by Wall Street.
For this column, I'm going to focus on the latter – and show you how this seemingly unconventional investment strategy can actually make you a lot of money.
If you want quantifiable proof, consider this nice bit of research from Cem Demiroglu at Koc University in Turkey, and Michael Ryngaert at the University of Florida: In 2008, they conducted a study that showed that stocks without any analyst coverage experienced a 4.82% higher return than their peers after coverage initiation.
The lesson here is simple.