Smash hit

A&L has suffered from speculation about the similarity of its business model to Northern Rock, the mortgage bank that had to be rescued by the government. The company strenuously denies it is in any difficulty.

Shah, who inherited Bolton’s Special Situations fund and shares his mentor’s fondness for banks, said: “I take a contrarian view and look for valuation anomalies, where a share undervalues the company’s prospects. After the significant falls in some of the sectors sensitive to interest rates, I see more opportunities in financials such as A&L.”

Astra Zeneca and Glaxo

“Pharmaceuticals stand out as being contrarian shares,” said Woodford, “because they remain broadly out of favour with investors as a whole.”

He has been buying Glaxo Smith Kline and Astra Zeneca as their shares have continued to decline, a trend that has pushed up the yields to more than 4% in both cases.

Woodford said: “They are both at near-decade lows, and while there are short-term concerns around patent expiries and the threat from generic drug manufacturers, we believe the long-term potential of these companies is significantly undervalued. They have the opportunity to turn massive research and development spending into new and substantial revenue streams.”

Bovis Homes

While these shares are near a 12-month low, Stick, the Bovis champion, said: “There’s a danger that in the rush to be involved in the shares of the moment, investors fail to recognise the worth of so many creators of longer-term value. Our focus is on companies with strong balance sheets; high, well covered yields; strong cash generation; high barriers to entry; and pricing power — qualities that should provide some resilience in the current climate.”

As far as the housebuilder is concerned, he points out that land in Britain is a finite commodity, and firms with land on their balance sheet have a very valuable asset.

“If the market fails to recognise this, then a competitor will,” Stick said, implying that in that situation Bovis might eventually be on the receiving end of a lucrative takeover bid.

New Star

The fund manager floated on the stock market last summer, just before the credit tsunami swamped everything financial. It also made an ill-fated move into property just before that sector plummeted.

Borrows said: “We have seen the shares fall to 83p when the firm has £20 billion under management. It still looks pretty cheap to us at 135.5p.

“Even if they saw further outflows of 30% to 40% of investors’ money, it would still look cheap. The managers have had some difficulty with performance, but they basically know what they are doing and they are likely to come back.”

Severfield-Rowen

At first blush, few shares could be less promising than Severfield-Rowen. It’s a specialist engineering group that designs, manufactures and erects structural steelwork throughout Britain, so it is closely linked to the troubled building and property sectors. And one of its largest projects was Heathrow’s terminal 5, although the blunders there had nothing to do with Severfield.

Nevertheless, the shares have been remarkably resilient. Stick reckons this is because it is a price-setter, leading the way in imposing higher prices on its customers, with a strong order book and low debt.

Times Recommends

• How to sell your home in a downturn
• How to boost your spending power
• Unemployment benefits explained