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Are hated stocks good investments?

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  • Nam, Jouahn
  • Wang, Jun
  • Xing, Cunyu
  • Zhang, Ge

Abstract

We study the performance of hated stocks, defined as stocks with the average analyst recommendation level of hold or worse. From 2009 to 2016, this group of hated stocks in S&P 500 performs better than the other stocks in S&P 500. When we extend the sample to all stocks with at least five analysts following, hated stocks again outperform non-hated stocks in the same time period. However, this result is driven by two factors: the impact of the time period of 2009 and 2010, and low priced stocks. If we start the strategy of investing in hated stocks at the beginning of 2011, or if we exclude low priced stocks, there is no significant outperformance of the hated stocks.

Suggested Citation

  • Nam, Jouahn & Wang, Jun & Xing, Cunyu & Zhang, Ge, 2018. "Are hated stocks good investments?," The North American Journal of Economics and Finance, Elsevier, vol. 43(C), pages 19-29.
    • Handle: RePEc:eee:ecofin:v:43:y:2018:i:c:p:19-29
    DOI: 10.1016/j.najef.2017.10.001
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    References listed on IDEAS

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    Cited by:

    1. Jaideep Singh & Matloob Khushi, 2021. "Feature Learning for Stock Price Prediction Shows a Significant Role of Analyst Rating," Papers 2103.09106, arXiv.org.

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    More about this item

    Keywords

    Analyst recommendations; Hated stocks; Investment performance;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets

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