Contrarian Manager Wins by Buying Newspapers, Avoiding China

The classic contrarian investment strategy is to buy what everybody hates and sell what everybody loves. The trick is to uncover valid reasons for why the consensus is wrong. Bill Smead has proven expert at doing just that. The manager of the Smead Value Fund, which holds just 26 stocks, has delivered a 15.2 percent three-year annualized return, besting 97 percent of his large-cap blend peers while investing in such hated industries as newspapers. Unlike many of his rivals, he’s bullish on the U.S. while avoiding companies exposed to China. Lewis Braham spoke with the Seattle, Washington-based investor.

Q: You’ve had better performance with less downside risk than peers, even though concentrated funds like yours tend to be volatile. How do you manage volatility?