However, often by the time you’ve read a news headline about a certain stock, it’s too late to take advantage as the market has already reacted and re-priced the share.

Contrarian investing is about swimming against the tide by buying into assets or stocks others are ditching.

This is different to value investing, a common strategy used by fund managers, which involves buying into unloved or less fashionable companies perhaps where they can see a catalyst for eventual re-rating.

Here, UK fund managers reveal which contrarian picks they are currently backing and why:

Colin McLean, managing director of SVM Asset Management

Barclays

Barclays is a global bank, with a broad range of investment and other financial services.  Banks remain unpopular, with many investors concerned about the regulatory burden, which follows repeated control failures.

However, Barclays’ management is determined to cut costs and re-shape the bank.  With reduced emphasis on riskier investment banking areas, investors may re-rate its high street retail banking franchise.  Any pick-up in inflation and bond yields would also help the bank’s profitability.

George Godber, manager of the CF Miton UK Value Opportunities fund

Norcros

Norcros is an interesting smaller company but with big market presence. The group owns Johnson Tiles, the UK’s leading branded ceramic tile manufacturer, and Triton, the UK market leader in showers.

Consumers have been cautious about spending money on bigger ticket items such as bathrooms but recent indications are showing this is starting to improve. The company produced a solid set of full year numbers in June, which show sales growth and improvement in profits. Crucially, the balance sheet is now clean from legacy issues and cash flow has been strong. The shares trade on a low earnings to share price ratio and offer a 3% dividend yield. In the context of improving consumer confidence and the ratings for some other domestically exposed stocks, this seems reasonable.

Alex Breese, manager of the Schroder UK Equity fund

Balfour Beatty

The valuation remains depressed after a torrid few years which have seen significant management change and multiple profit warnings.

There are encouraging signs that the turnaround strategy implemented by the new management team is beginning to bear fruit.

Scott McKenzie, manager of the Saracen UK Income fund

Barclays

Barclays has parted company with its chief executive, with the directors, led by the new chairman , John MacFarlane, deciding that new leadership is required to sort out the bank’s problems and move the business forward.

This is not a company which has covered itself in glory in recent years. As with many banks profits collapsed during the financial crisis and the bank required significant equity funding to survive. Thankfully this did not require a bailout from the taxpayer.

However shareholders have suffered huge fines for the bank’s improper practice in areas such as foreign exchange and the setting of LIBOR rates which has left the shares struggling to perform.

In addition the major expansion of the investment bank which led to Barclays buying Lehman’s in 2008 has now been reversed and this business is being scaled down dramatically with a focus on improving the very poor current returns

This is not a share for the faint hearted. However, we believe that there is now light at the end of the tunnel and Barclays is a core holding in the recently launched Saracen UK Income fund.

The new chairman has a track record of turning around troubled businesses having achieved good results previously with Aviva. The core retail banking business is a sound one and the financial ratios are now improving.

The shares trade below their book value and we firmly believe that Barclays will pay healthy dividends and improve shareholder returns in the coming years. Whilst the road ahead will not be smooth it should be a profitable one for shareholders.

Dan Hanbury, manager of the River & Mercantile UK Equity Income fund

BHP Billiton

Buying blue chip global leading companies in distressed industries when valuations are low can often pay dividends for investors.  This is why we believe that BHP Billiton is a contrarian buy today.

It is a stock that a few years ago displayed many attributes of a high quality company with high and rising returns, earnings growth, a strong balance sheet and positive momentum.  Mining stocks are of course highly cyclical and they are largely at the mercy of their underlying resource markets.

Four years into the commodity slump and with heightened fears about China’s growth, there is evidence that BHP Billiton’s management has engaged in a sufficient restructuring of its portfolio of mines that its superior balance sheet and mine quality should see them through the low point in this cycle without recourse to shareholders and in all likelihood maintaining their dividend too.

BHP Billiton has one of the stronger balance sheets in the sector and following the spin off of South 32, which consisted of their silver, coal, nickel and aluminium divisions earlier this year, it is now left with a core of fewer than 20 high class iron ore, copper and coal assets primarily located in Australia and the Americas.  A restructuring programme alongside this demerger, including shutting down capital intensive mines and extensive cost cutting, is evidence that the management is in cash flow preservation mode.

Capital expenditure requirements on core mines is considerably less than in some of the demerged smaller mines requiring life extensions and they are no longer sinking billions every year into their shale gas assets which have been a significant drag on the business.

The cash flow focus is critical in understanding whether BHP Billiton will be able to maintain its dividend even as iron ore and oil prices hit $50.  We believe they can, assuming 2015/2016 will be the trough for commodity prices – the assumption being a large chunk of the competition will have to shut mines if prices stay low for long.  At a price of £12 BHP Billiton has a dividend yield of 7.4% which is sufficient reward to wait for the trough in the cycle over the next couple of years while commodity prices eventually stabilise.

Contrarian investing typically feels uncomfortable with momentum and consensus opinion against you but as Sir John Templeton said “To buy when others are despondently selling and to sell when others are avidly buying requires the greatest fortitude and pays the greatest ultimate rewards”.