BALTIMORE ( Stockpickr) -- It may sound crazy, but the stocks everyone hates could make you rich.
That's not just my opinion; the data bears it out as well. Going back over the last decade, buying heavily shorted large- and mid-cap stocks (the top two quartiles of all shortable stocks by market capitalization) would have beaten the S&P 500 by 9.28% each and every year. That's some material outperformance during a decade when decent returns were very hard to come by.
It's worth noting, though, that market cap matters a lot. Short sellers tend to be right about smaller names, with micro-caps delivering negative returns when the same strategy is used.
Garmin First up is GPS giant Garmin (GRMN - Get Report). Garmin is on short sellers' perennial hate list, with a short interest ratio of 18.45 -- that number indicates that it would take short sellers close to a month to cover their short positions in this stock. Much of that animosity comes from Garmin's bread and butter: Personal GPS devices for in-car navigation. While these units fuelled Garmin's growth in years past, they've become increasingly commoditized more recently, with margins shrinking as competitors take extremely similar products to market.