Investing in Unloved Stocks Requires Vision, Patience

For some investors, stocks that are a little rough around the edges shout possibility.

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Performance results validate the approach. Going back to the beginning of 1994 through the end of 2011, the unloved funds returned an annualized 8.98 percent, versus 7.42 percent for the S&P 500, Morningstar data shows.

Certainly, success with betting against the crowd is not new. Warren Buffett has famously said that a simple rule guides his stock buying: Be fearful when others are greedy, and be greedy when others are fearful.

Just be sure to jump in for a reason beyond the discount.