Five Spot: Buy Technology, Avoid Banks

Ragen Stienke, manager of the WHG SMid Cap Fund(WHGMX), says he's steering clear of financial-services stocks, among the best performers in the rally that started in early March.

Stienke favors technology companies for his $121 million fund, which has earned a top ranking of five stars from Morningstar. The WHG SMid Cap Fund has fallen 30% in the past year, less than 91% of its rivals. During the past three years, it has declined an average of 3% annually, compared with a 10% loss for the Russell 2500 index.

TheStreet.com's Fund Manager Five Spot is where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Are you a bull or bear?

Stienke: We are neutral on the market. After the recent snapback of over 20%, we believe the market is already discounting a recovery and that the balance of risks is even.

What is your top stock pick?

Stienke: We have a value focus with specific regard to downside risk. Our first concern is to quantify how much money we can lose if and when we are wrong. We compare that to the opportunity for gain if and when we are right. We buy stocks when our reward-to-risk ratio is greater than 3 to 1.

Airgas(ARG) represents a unique combination of early cyclical exposure to an industrial upswing, and defensive characteristics due to recurring revenue from rentals. In addition, this downturn gives Airgas further opportunity to consolidate a fragmented industry.

What is your top "beneath the radar," or "sleeper," stock pick?