Five Spot: Ende Buys Junk Cars, Jewelry

Eric Ende, manager of the FPA Perennial Fund(FPPFX Quote), puts a lot of weight in each of the fund's holdings, which he tends to own for years.

The mutual fund has risen 21% this year, double the returns of his peers. He also has beaten his rivals over one, three and five years. FPA Perennial gets four out of five stars from Morningstar.

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 a bear?

Ende: We are more bull than bear now. We feel that the likelihood of systemic collapse is now greatly reduced and that the undoubtedly severe recession was well-discounted in stock prices at the first-quarter lows.

What is your top stock pick?

Ende: Our methodology is fairly straightforward. We look for superior returns on capital, strong balance sheets and modest valuations. We have a concentrated portfolio of 30 stocks, and very long holding periods, typically over five years.

Our favorite stock right now is Copart(CPRT Quote), a processor of mostly salvage vehicles. It's the leader in its industry, with strong market share, technology, significant barriers to entry, and promising growth initiatives both in the U.S. and in Europe.

What is your best beneath-the-radar, or sleeper, stock pick?

Ende: Below the radar, we like Signet Jewelers(SIG Quote), the leading operator of chain jewelry stores in the U.S. and in England, selling here under the name Kay's. There have been significant failures of competitors, both large and small, improving Signet's already strong position and likely to increase its market share and profitability.