Compulsive over-grooming

We just adopted a rescue black cat (long hair) from a shelter. He is such a sweetheart, and is 3years old. He is FiV positive, and even moving intoa small apartment is a bit overwhelming. Overall, he is acting normal (litter box, eating and drinking, loves to cuddle) but the problem that was noticed while he was at the shelter still persists- excessive grooming to the point of hair loss and sores.
The vet was able to rule out everything but a compulsive impulse to groom (which I also believe because my previous cat RiP had food allergies and none of those sores have appeared or had a history of appearing on this cat).

What are some good ways to help minimize this grooming and biting tendency- he has a hot spot in these areas as well probably because the skin is inflamed, in a way that doesn't stress him out too much?
Could we try using ace bandages on some of the severely raw spots (just cover up little bits at a time), or is there a lotion or something that could help with potential itchiness of his new fur coming in?
How do we create and maintain a different coping mechanism for him (because having an outlet for stress may still be needed) ?

Thankfully I'm home all day so I can give him lots of attention, and try to redirect the licking.

I would suggest getting him to the vet and perhaps getting one shot of long acting steroids to break the cycle.  I have a cat who gets the same condition but only seasonally, in the fall, but complete with the over grooming and nasty raw oozing spots.  The first time I took him to the vet for it, he got one shot of depo-medrol that lasted a month and after that he was fine -- until the next fall when it came back again, and I got him another shot and again that lasted him for a year.  This year he started again and I took someone else's suggestion and put him on Zyrtec, 1/2 tablet once a day, and that controlled it, but if it had not worked, I would have taken him for another shot.  Since your cat is already in the acute stages, covering the raw spots won't do anything.  It's worth going to the vet and trying some form of steroids to break the inflammation cycle.