(FORTUNE Magazine) – To most investors, news of an SEC investigation is the ultimate sell signal. Not to Chuck Papageorgiou. The 39-year-old Atlanta consultant is one of an admittedly small number of investors who have profited from ignoring the recent chorus of accounting scandals. With every new probe, says Papageorgiou in a thick Greek accent, "you have to ask yourself, 'Is this the beginning of the end or just a witch-hunt?'"

When it came to medical supply company PolyMedica, Papageorgiou had a hunch it was the latter. The stock had already been hit by a criminal investigation into one of the company's subsidiaries, so--sensing a buy--he decided to tap his informal network of medical sources, including an acquaintance who runs a hospital and a friend with a diabetic child. His informants felt the company was solid, so Papageorgiou started snapping up shares. In December, when PolyMedica announced an SEC investigation of its books, other investors panicked, sending the stock down 22% in one day. But Papageorgiou continued to buy each time the stock dipped below $20. When it hit $25 in mid-March, he sold his entire position.

Still, he had a feeling the run wasn't over. There was nothing on the chat boards about PolyMedica--silence that to him was golden. "If there's something bad going on, people love to talk about it--it had been quiet for a while," he explains. So he started buying again around $25 and vowed to sell at $30. On April 8, the SEC terminated its inquiry without recommending any enforcement action; the shares shot up 53%. Papageorgiou unloaded his position the next day at $38. But if it drops to $32, he says, he'll buy again (and sell at $40).

Granted, fighting the SEC is probably not a winning strategy in the long run. Jokes Thomson Financial strategist Joseph Kalinowski: "If I had a crystal ball and knew which companies were going to be cleared, I'd be on a beach trading my own account." And according to the SEC, of the 67 financial reporting investigations opened over the past three months, a mere 15 have been closed with no action taken. Even Papageorgiou will only undertake plays like PolyMedica with money he can afford to lose. After the bubble burst in 2000, he says, "I turned most of my money over to my broker."

--Lee Clifford