Using a contrarian approach, I go against the grain to find overlooked funds that may be ready to rally, explains Russel Kinnel in Morningstar FundInvestor.

Warren Buffett is betting that energy prices will come back at some point and that his a $37 billion deal for Precision Castparts (PCP) will prove to be a bargain.

He’s long made investments in companies where short-term problems make a company attractive to the long-term investor.

Want to invest like Buffett? All you have to do is pick a beat-up fund that invests heavily in industrials and energy.

I looked for diversified Morningstar 500 funds with the most combined investments in those sectors. Naturally, most have poor recent performance because of their investments in those lagging sectors.

Delafield (DEFIX) has 38% in industrials and 7% in energy. This fund has suffered dismal performance during the past five years, but perhaps there’s a rebound in the offing.

Dennis Delafield and Vince Sellecchia have long bought unglamorous companies attempting turnarounds and they’ve done quite well until recently when their sector biases have hurt returns in a big way.

Expectations for many of their companies are beaten down, so it might not take a lot to bring them back.

Lateef (LIMAX) doesn’t own any energy names, but it has a huge 36% investment in industrials. Because it doesn’t have energy, performance has merely been mediocre of late.

The fund tends to focus a little higher on the quality spectrum than Delafield, as it has industrials alongside growth favorites.

Mairs & Power Growth (MPGFX) is a bit of a surprise entry given its emphasis on steady growers. But the fund has 32% in industrials and 3% in energy.

Lead manager Mark Henneman looks for well-run companies that can grow at a steady clip. However, he likes to get in on the cheap end and thus tends to buy amid a downturn.

Royce Premier (RYPRX) is much more in the Delafield mold. It owns deep-value names and it has been punished severely for it.

So, this and Delafield probably would give you the most bang for your buck should energy and deep-value industrials rebound, but of course, they also have the greatest downside if the slide continues.

Chuck Royce became sole lead manager here when Whitney George exited because of some bad bets on materials stocks.

The fund has 30% in industrials and 5% in energy. Royce wants companies with clean balance sheets that are also trading at a steep discount.

It’s the latter part that has gotten the fund into challenging situations, as the market isn’t offering many great companies at big discounts these days.

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