Olstein Fund Bets on Consumer: Five Spot

What is your top "sleeper" stock pick?

Heyman: Once again, our propensity for finding investment opportunities in companies undergoing significant transformation led us to Jack in the Box(JACK). Jack in the Box is in the process of changing to a franchise-based model, which generates more predictable cash flows and is a less capital-intensive model for the parent company.

In tougher economic times, business models that generate more predictable cash flows result in greater shareholder value. We believe there is also a hidden gem in the company's Qdoba brand -- a Mexican-themed, quick-service restaurant chain -- that we believe will eventually be spun off thus realizing greater value for shareholders.

What is your favorite sector?

Heyman: Although we don't pick sectors we believe we're finding outstanding value in the consumer discretionary sector, which has been severely punished because of the economy.

In the consumer discretionary sector, we're finding many companies that have implemented appropriate cost-cutting measures in the face of flat or declining sales. We believe these measures will pay off considerably as the economy improves and these companies are able to translate leaner operations and sales growth into greatly increased earnings.

What sector or stock would you avoid?

Heyman: We remain very skeptical of leveraged business models, particularly in the financial sector. However, we haven't written off the entire financial sector. We're finding compelling values in asset-management firms such as AllianceBernstein Holding(AB).

-- Reported by Gregg Greenberg in New York.

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