Top Fund Manager Finds Fewer Bargains

NEW YORK (TheStreet) -- James Potkul, manager of the Bread & Butter Fund(BABFX Quote), says it's more difficult to uncover unloved value stocks because investors are snapping up all types of companies in the stock-market rally.

The mutual fund has risen 23% this year, compared with 18% for the Standard & Poor's 500 Index of the largest U.S. companies. Over past year, the Bread & Butter fund has gained 0.4% during the bust and boom, better than 96% of its peers tracked by Morningstar.

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

Are you bullish or bearish?

Potkul: Currently, I am neutral to bearish. After this record-breaking rally off the March lows, I am finding fewer stocks that are undervalued when applying our contrarian value strategy. Also, I believe we are living through a once-in-a-lifetime economic event, and that the economy is resetting a few notches lower to a new base of economic activity going forward. With the shadow banking system practically disappearing and credit being allocated in a more rational manner, except government stimulus schemes, I cannot see how economic activity can bounce back to pre-2008 levels for some time to come.

What is your top stock pick?

Potkul: My top stock pick is Philip Morris International(PM Quote), the largest international tobacco company in the world with seven of the world's top 15 brands, including Marlboro, the No. 1 cigarette brand worldwide. The company has all the characteristics of a solid defensive stock that offers a growing dividend stream. Although Philip Morris is in a controversial industry, it has no exposure to the highly litigious domestic market.