Mutual fund tracker Lipper gathered its favored portfolio managers yesterday to discuss their outlooks for the financial markets and tout the stocks they’re buying right now. The managers were chosen because they have received a top rating by Lipper—for their consistently strong, risk-adjusted performance (in top 20 percent of their peer group).
Here’s what they had to say:
Sam Lieber, CEO of Alpine Management & Research and manager of the $90 million Alpine Dynamic Balance Fund, bravely predicts that there is no real estate bubble. That said, Lieber believes the economy will “muddle through an extended soft patch over the next 12 months.” And that concerns over a real estate bubble will abate. With strong fundamental demand exceeding constrained supply in the real estate sector, Lieber sees homebuilder Toll Brothers continuing to outperform and generate strong earnings growth. He likes “dominant or distinct franchises” that separate themselves from the pack and companies with attractive dividend yields.
David Williams, managing director, head of value investing at U.S. Trust and portfolio manager of the $5.1 billion Excelsior Value & Restructuring Fund, is bullish on the market citing low interest rates, strong earnings, lower taxes on capital gains and shareholder-friendly fiscal policies. Consistent with his buy discipline, he looks for companies that are restructuring to generate growth. Right now, he’s snatching up shares of Black & Decker and Dean Foods.
Eric Barden, manager of the Texas Capital Value & Growth Fund, lines his portfolio with undervalued growth stocks. Sector and industry selections have served as the catalyst for his fund’s outperformance, notably refiners, drillers, managed care and homebuilders. Looking ahead, he plans to build positions in engineering and energy outfit Michael Baker Corporation, which stands to benefit from government spending on homeland security and infrastructure. Barden also likes Home Depot for its strong balance sheet coupled with housing prices motivating homeowners to upgrade their homes. He also expects trouble at Sears to help boost appliance sales.
Jordan Irving, manager of the Delaware Dividend Income Fund, predicts slower economic growth and modest equity returns. With that as a backdrop, he likes companies like Safeway, Merck and FPL Group.
John Schmitz, manager of the Fifth Third Strategic Income Fund, noting that the elderly population has dramatically increased in recent years, is high on Procter & Gamble. He is also adding shares of shopping mall operator Simon Property Group, citing strong occupancy trends and lease renewal spreads.
Douglas Eby, manager of The Torray Fund, has steered clear of sector bets on energy, retail and transportation, rather he hunts for the best companies at reasonable prices. Electronic banking services firm First Data and medical device maker Medtronic are two stocks that fit the bill, Eby says.