10 Questions: At Charles Bath's New Value Fund, There's No Room for Tech

6. What sectors look strongest for you going forward and is this at all based on any kind of macro assessment of the market and economy?

In much of my career, I've had very large weightings in a couple sectors -- including consumer staples, food, beverage, tobacco, household products and healthcare -- specifically pharmaceuticals. More and more, I'm not finding attractive evaluations there on a relative sense. Those areas for me are particularly underweight compared to where they were before.

Where I'm finding the most attractive names are the old-line industrial-type companies. Many of them have been abandoned or ignored. They've lacked the sex appeal of the 1990s. Many of them came down in the 1980s. In fact, many of the stocks are trading lower prior to the crash of 1987 and so they were ignored. The excesses of the 1990s didn't really occur in this space. I think we will find that the excess of the 1990s will be with us for a while and perhaps be a drag on returns in some areas of the marketplace. The basics of it: too much capital in a certain area chasing a higher rate of return. That flood of capital will drive down those rates of return and a lot of capital has not entered these industries.

For example, Brunswick(BC Quote) is a stock I own. It's trading at $20 a share; it was trading at $28 in 1987. So, 15 years of doing nothing, part of it is justified. But I think now there's a new management focused on its core businesses and on earnings again. Needs a little cyclical help, but I think they'll get it. Brunswick is indicative of where you'll find the attractive valuations.

Trinity Industries(TRN Quote) is another unusual company; they make rail cars. It tends to be a fairly cyclical business, as you can imagine. The last cyclical peak, they earned $4 a share. Now, rail cars fell off the cliff in the last couple years. Well, the last couple quarters rail-car orders have improved. Now, if you wait until you see the earnings come through, you'll miss the stock. The stock is still trading below book value, so that's another unusual, more industrial old-line company -- another example of where I'm finding opportunities. This stock is still trading at half of where it was five years ago.