Fund Managers Covet These Cheap Stocks

Colin Glinsman, manager of the $1.86 billion Allianz (PDLAX Quote)OCC Value Fund(PDLAX), says investors need to look at individual stocks and determine if the market has overreacted to the mortgage crisis.

Like Puglia, Glinsman thinks some -- but not all -- financials were oversold last week. In general, "if it doesn't have exposure to the credit crunch, it's cheap," he says.

"We look for companies where the stock overshoots on the downside because of fear, but is fundamentally sound. These are the ones that will go up after this period," says Glinsman.

Of course, he has to sell something to free up cash first. So he scans his portfolio for stocks that are trading at levels close to their long-term fundamental value and have less upside potential. "I sell those and deploy funds to stocks which have [more] upside," he says.

Glinsman especially likes MBIA(MBI Quote) and Ambac Financial(ABK Quote).

OCC Value is up 0.3% year-to-date, but has returned an annualized 11.35% over the past three years. It has an expense ratio of 1.11% and a front-end load of 5.5%.

Clark Winslow, manager of the $900 million MainStay (MLAAX Quote)Large Cap Growth Fund (MLAAX), is adding to his holdings of some stocks while aggressively selling those that no longer fit his investment criteria.

While some commentators believe the U.S. economy is headed into a recession, Winslow believes growth will merely slow. He expects that a rise in unemployment and a reduction in capacity utilizations will lower inflationary pressures, allowing the Fed to drop interest rates. That should help the stock market recover next year.