Contrarian investing can reap rewards but it tests investors' conviction

Contrarian stocks can help investors generate much higher returns than buying shares of companies that have shown consistent high growth for years

Jatin Khemani’s Stalwart Advisors took a tough call on Crompton Greaves in March 2016. Most market participants were worried about the company’s performance in those days. Stalwart Advisors picked the stock at Rs 146 in March 2016. After 18 months, in October 2017, they sold Crompton Greaves at Rs 292 making a 100 per cent return – this is a classic example of going against the herd or contrarian investing.

The investment advisory company placed its bet on the new management and restructuring of overseas operations. “There is an opportunity cost when you go contrarian as things don’t turn around overnight.