UK staffing companies, banks, selection resources stocks and one of the FTSE 100's worst performers last year are some of the areas where Fidelity's Alex Wright is finding contrarian opportunities as market leadership broadens beyond large-caps.
As manager of the Fidelity Special Situations fund, Wright runs a bottom-up, contrarian strategy that looks past prevailing sentiment to find unloved companies whose downside risk he understands.
Wright thinks the gap between large-caps and stocks in the mid- and small-cap tiers has started to narrow, creating a more supportive environment for stock picking.
"Despite the strong performance of UK equities in recent years, the breadth of opportunities leaves us optimistic about the outlook for our contrarian approach," he said.
Below are the four areas where he has been adding to positions.
Staffing: Hays, PageGroup and SThree
Wright holds Hays, PageGroup and SThree, three staffing companies that have endured one of the weakest recruitment markets in decades. Weak hiring activity, fears over AI-driven disruption and geopolitical uncertainty have pushed their valuations to trough levels.
The manager has increased the fund's staffing exposure over the past 12 months. His research and site visits led him to conclude the sector's problems were "predominantly cyclical, rather than structural".
"These businesses have flexible, people-based cost structures and net-cash balance sheets, allowing them to adjust costs as activity falls while maintaining robust financial positions," he said.
"This provides downside protection and the flexibility to weather an extended period of depressed recruitment activity, while offering substantial upside should a recovery in hiring activity materialise."
The holdings have already rebounded after strong trading updates, with gross profit coming in ahead of consensus. The firms also reported signs of stabilisation in the UK, Asia-Pacific and US markets, regions Wright said have some of the most advanced AI adoption, which he took as further evidence against a structural decline.
Financials: NatWest and Lloyds
Bank exposure sits near its highest level of the manager's tenure on Fidelity Special Situations, though spread across different geographies and business models. Wright began increasing exposure to banks in late 2021, when rising interest rates and strengthening fundamentals met valuations he saw as deeply discounted.
"Banks have performed strongly since then, supported by earnings upgrades, improving returns on capital and significant capital distributions to shareholders. Yet we continue to see attractive value," the manager added.
"Unlike the post-financial crisis period of near-zero interest rates, today's interest rate environment allows banks to earn attractive margins on deposits and generate stronger returns on capital."
Wright said he is not making "a precise call on the interest rate level", arguing instead that banks can generate solid returns across a relatively wide range of rate environments. On this basis, he has added this year to NatWest and Lloyds, both trading at 7x to 9x forward earnings.
Much of the sector's share-price gains have come from earnings growth rather than a re-rating of the shares themselves, the manager said. That leaves the stocks trading well below their typical historical valuation levels, even though the market has not yet fully recognised the strength of the underlying businesses.
Resources: Glencore
Fidelity Special Situations has consistently held an underweight position in resources, reflecting the large benchmark weights of energy and mining stocks and the manager's selective approach to the sector. But diversified mining and commodity marketing business Glencore is an exception, as Wright opened a position in March 2025 after sharp share-price falls and large earnings downgrades.
"We were attracted by Glencore's diversified commodity portfolio and, in particular, its meaningful exposure to copper. Our research indicated structural supply constraints and a supportive long-term outlook for the metal, and Glencore has a pipeline of projects that should position it to benefit from growing demand over time," he said.
The firm's shares have performed strongly since, as the market recognised the growth potential in copper and takeover interest has drawn attention to the value in its wider commodity portfolio. The manager added to the position again this year as the investment case continued to develop.
Glencore's coal exposure offsets higher gas prices at a time when energy costs weigh on many other miners' profitability, according to Wright. Its trading arm also performs well during periods of market volatility, he added.
Defensives: Bunzl
Several of the fund's defensive holdings performed well last year and the manager took profits as valuations became less attractive. He redeployed some of that capital into Bunzl, a global distribution business supplying products such as food packaging, cleaning supplies and disposable gloves, which was among the worst performers in the FTSE 100 in 2025.
"Problems within its North American food service division caused earnings to disappoint and shares to de-rate materially. The company had centralised decision-making and shifted towards higher-margin own-brand products, but these changes ultimately affected customer relationships and resulted in market share losses," the manager explained.
"Importantly, the problems remained concentrated within a division representing only around 20% of the business, while the remaining operations continued to perform well."
Wright tested management's account of the problems by holding expert calls with former industry participants and competitors, working alongside Fidelity's analyst team. He concluded the issues were temporary rather than structural, pointing to management's reversal of some of the problematic changes and the replacement of divisional leadership as identifiable catalysts for recovery.
The turnaround has progressed faster than the manager initially expected, with recent trading showing improved organic growth and a re-rating beginning in the shares.
"While still early in the investment case, Bunzl illustrates the type of opportunity we seek: a fundamentally strong business where a specific and potentially reversible problem creates an attractive entry point," the manager finished.