The last few months have been terrific fun if you hang around the grottier end of the market. I like contrarian, value-based stocks, so I spend much of my time looking in the bargain basement.

That’s the whole point of the “Dr Strangelove” portfolio that I launched in November. It now holds 15 companies and, as the table below shows, has risen in value by more than 40 per cent. One holding – Camec – is up 342 per cent.

There have been some duds – five shares are down with Midas Capital falling 22 per cent. But, overall, I’m fairly happy.

I make no claim to being prescient with this list. I accept that they’re mostly bystanders in the “Dash for Trash” – Bloomberg recently pointed out that companies with the worst debt and the lowest returns on assets had produced the biggest rally since 1938! In contrast, hedge funds that operated a shorting strategy based on selling the companies with the worst fundamentals, suffered horrible losses.

The net effect of all this bullish sentiment is that the hunt for genuinely interesting stuff in the distressed space has become an awful lot harder.

My criteria for candidates for the Dr Strangelove portfolio are: lots of asset backing, share price falls of more than 80 per cent over the last 12 months, cash on the balance sheet and no real debt. But when I screened for companies meeting the criteria, just 22 emerged. And not one of those passed any sensible test relating to debt or a diversified range of assets.

So I’ve not added any more to my Dr Strangelove portfolio in the last few months. If anything, I’m changing tack. My new approach is to look for listed funds where the share price’s discount to net asset value (NAV) is greater than 25 per cent. I’ve also used data from the Numis funds team to look for listed funds where the Z score – a measure of financial robustness – is above 2.5. This measure removes many funds where cash is running out or debt is an issue.

Some of the resulting shortlist of 28 are already in my portfolio but four stand out as possible bargains: the two Indian outfits, Eredene Capital and Alpha Tiger Property, plus North Atlantic Smaller Companies and the VinaCapital Vietnam Opportunity Fund.

Eredene has a focus on infrastructure, and its discount to NAV is 45 per cent. Alpha Tiger’s attraction is more opportunistic: it has a large cash pile that could be put to great effect over the next 12 months. North Atlantic, a smaller companies active value fund, has had a rough 12 months. However, the shares are up 23 per cent in the last three months. I think its mix of assets should come into its own. VinaCapital has a highly-regarded local manager but a discount to NAV of 35 per cent. I have to say, I am warming to it.

adventurous@ft.com