A news headline ran across my screen the other day that fingered Fannie Mae (FNM) as the most-hated stock in America. Losing 90% of your shareholders' equity will tend to create some ill will, but "most-hated stock" is a pretty harsh label.

Instead of a subjective condemnation, let's quantify the hatred and look at the universe of stocks in the Russell 3000 index that show the highest levels of pessimism.

To define "pessimism", I'll require that the stock have:

1. A Short Interest Ratio that is in the top 10% of all stocks (showing a huge amount of bets the stock will fall relative to its average trading volume).

2. A consensus analyst rating that is in the lowest 10% of all stocks (showing that Wall Street has given up on the stock). At least three analysts have to cover the stock in order for us to consider it. The ratings go from 1 (strong sell) to 5 (strong buy).

3. Has put option open interest relative to call option open interest that is in the top half of all stocks (showing that traders are heavily invested in put options - bets the stock will fall).

When I ran that screen against the Russell 3000, only a handful of stocks made up the list of those that are truly despised. Oddly enough, FNM didn't qualify, although the Financial and Consumer Cyclical sectors were well-represented.

The table below shows the ratios I used to determine most-hated status, along with a "hate" score that combines all three of them. The table is ranked so that the most-hated of the most-hated is on top. 



Media General (MEG) took the top honors, followed by Frontier Financial (FTBK) and Western Alliance (WAL), both financials. Small-cap Dendreon (DNDN) is an interesting candidate, since it's barely down on the year and has made quite a combeback over the past month along with other biotechs.

The average year-to-date return in the stocks is -36%, well below the S&P 500, so it's no wonder these stocks have fallen out of favor. They may be worth watching, as the hurdle for a positive surprise is probably quite a bit less than the most-loved stocks.