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Smead Value Fund Snaps Up eBay

SEATTLE ( TheStreet) -- Bill Smead, manager of the Smead Value Fund (SMVLX), expects U.S. stocks to rise next year, but he's wary about commodities and emerging markets.

The large-cap value fund has risen 32% this year, better than 85% of its Morningstar (MORN) peers. The fund's top holdings include eBay (EBAY - Get Report), Franklin Resources (BEN - Get Report) and Starbucks (SBUX - Get Report).

Welcome to TheStreet'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 a bull or bear?

Smead: We are bulls. The point of maximum pessimism was in early March and was probably a 30-year extreme in pessimism. It will take years to work off the negative sentiment toward stocks. Also, it has been eight years since large-cap, recession-resistant quality stocks were in favor on either a relative or absolute basis. As U.S. households increase their saving and commit some of the massive amounts of cash in low-interest liquid accounts to the stock market, brand-name companies could get a large part of the affection.

What is your top stock pick?

Smead: eBay is our top stock pick and the No. 1 position in the Smead Value Fund. We are "bottom up" stock pickers and this one has something for everybody.

First, eBay is a sum-of-the-parts story. They own PayPal, Bill Me Later, StubHub, 28% of Craigslist, 30% of Skype, five of the six largest online classified advertising firms in the world and the greatest online auction business in the world. They're also sitting on $5 billion-plus in cash, with no debt.
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BEN $37.74 1.07%
EBAY $24.26 -0.70%
LM $31.90 -0.65%
SBUX $57.36 2.01%
AAPL $93.92 0.19%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

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