Stocks Bargain Basement Is Empty, O'Neill Says

NEW YORK (TheStreet) -- Stephen O'Neill, co-manager of the RiverNorth Core Opportunity Fund(RNCOX), says investors would do better to pick the right closed-end fund manager rather than a specific fund because bargains are few and far between.

The large-cap blend fund, which invests mainly in closed-end mutual funds, has risen 41% this year, better than 99% of its Morningstar peers. Over the past year, the North Core Opportunity fund is up 17%, again exceeding 99% of its rivals.

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

Are you bullish or bearish?

O'Neill: The tremendous comeback in financial assets has left few opportunities for bargain-seeking investors. Most risky asset classes are trading near their average valuations. That being said, RiverNorth Capital remains bullish on many deep-discount closed-end funds because they provide a sizeable margin of safety for taking market risk at these levels.

What is your top fund pick?

O'Neill: The SunAmerica Focused Alpha Growth Fund(FGF) is a well-managed closed-end equity fund trading near a 15% discount to net asset value. The $290 million fund is co-managed by Tom Marsico and Ron Baron. The net asset value of this highly concentrated equity fund is up approximately 27% year-to-date. More importantly, nearly 20% of the fund is owned by institutional investors that have a history of proposing and/or supporting corporate actions that permit shareholders to redeem their shares at net asset value. With the fund trading around 85 cents on the dollar, we believe that one of these institutional investors may take an activist lead and pressure the fund's board of directors to take action.