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FAR FROM THE MADDING CROWD

With the whole market surging, it takes ingenuity to find a way to go against the grain

Pity the poor contrarians.
When the stock market shoots straight up for years, contrarians not only have to forage hard for good companies that are overlooked, out of favor, or undervalued, but they also have to apologize for underperforming the Standard & Poor's 500-stock index. Although he makes no apologies, New York money manager Robert E. Robotti, whose firm searches for undiscovered stocks, laments: ''Every stone we turn over looks like it's already been overturned.''

Still, some money managers are bold enough to venture a few recommendations they think defy conventional wisdom. At least one top fund manager believes certain natural-resources stocks, including energy, are still a good contrarian play. Paul H. Stephens, manager of Robertson, Stephens & Co.'s Contrarian Fund, says that as Third World economies expand, demand for gold, nickel, oil and gas, and other commodities will surge. ''We think you've got a 10-year bull market ahead in natural resources,'' he says. He stresses investments in companies with aggressive exploration programs, such as Golden Star Resources Ltd., a gold and diamond exploration company.

HIGH ENERGY. Stephens also likes companies that are positioned to take advantage of deregulation in power marketing, notably NGC Corp. and Enron Corp. To that list of energy stocks, Marian Kessler, portfolio manager at the contrarian Crabbe Huson Group Inc., would add Methanex Corp., a Canadian maker of methanol, a clean-burning gasoline substitute.

Telecommunications also offers a smattering of contrarian plays. Most prominent is AT&T, which Robert E. Torray, president of Robert E. Torray & Co., says doesn't get enough respect. Notwithstanding AT&T's well-known managerial snafus, Torray insists that ''it's one of the great brand names, with tremendous financial power.'' Scott M. Black, president of Delphi Management, thinks shares of cellular networks such as

Centennial Cellular Corp., which serves smaller cities, have been overly battered by worry about inroads made by new, digitized personal communications systems, which compete directly with cellular in big cities.

Other opportunities may present themselves in financial services. David N. Dreman, chairman of Dreman Value Advisors Inc., thinks the Federal National Mortgage Assn. (Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac), which issue mortgage-backed securities, have been overlooked as growth vehicles. Delphi's Black believes shares of some reinsurers, such as RenaissanceRe Holdings, already have been discounted for the worst natural-disaster scenarios.

STITCH IN TIME. Some contrarians scrounge for stocks that get slammed when earnings fall short of expectations. One example, says Torray, is computer outsourcer Electronic Data Systems Corp., whose shares plummeted by a third in October after disappointing third-quarter operating results. But now that EDS is independent of General Motors Corp., says Torray, it can bid for business from the other big auto makers.

Overseas, John Maack, a Crabbe Huson portfolio manager, likes Singer Co., the Hong Kong-based acquirer of the sewing machine franchise. Singer is doing a good job of tapping growing overseas demand, he says. Dreman thinks American depositary receipts of Hanson PLC, the British conglomerate, are a bargain. ''It's a complex company'' that's not well followed, he says. Which, of course, is just the sort of stock that the confirmed contrarian is always searching for.

By Phillip L. Zweig in New York



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