Doubling Down
With $371 million in new inflows last year, the $1.3 billion Smead Value Fund, has been aggressively deploying cash to buy more of companies it may have picked up on the early side. The fund gained 1.5 percent in 2015.
"This past week has been cheapening up stocks that we think are going to continue to do well for us," said Cole Smead, a co-portfolio manager. His fund has been adding to positions in retailers such as Nordstrom Inc and Tegna Inc, the broadcasting and digital companies spun out of newspaper publisher Gannett Co Inc.
He is also looking at adding to Bank of America and American Express, which now makes up one of the largest positions in his fund at 4.5 percent of the portfolio, he said. Both should benefit from rising interest rates.
Smead initiated its position in American Express during the mid-2015 selloff sparked by concerns about China, and has been adding to it steadily since then.
To be sure, there is risk in these contrarian strategies. Adding to positions, such as American Express, that have sold off comes at the risk that they may continue to fall. Bhansali said that even after the selloff she is having trouble finding consumer staples and energy stocks that have sold off enough to make them attractive.
Bryant VanCronkhite, portfolio manager of the $2.3 billion Wells Fargo Special Mid Cap Value Fund, said he has been adding to positions in energy and industrials companies that have "terrible" stock performance, he said.
One contrarian pick: Eagle Materials Inc, whose shares have fallen 11 percent year-to-date, and 25 percent over the last three months, largely because of its business providing sand for use in fracking wells. Yet the company also had a strong cement business, he said, and healthy fundamentals including a strong balance sheet that will allow it weather a downturn longer than competitors.
For VanCronkhite, the pessimism presented an opportunity.
"We've been able to defend positions and build new positions in names that we were waiting on a price on," he said.