Stock Picker's Market for Small Caps
The $55 million mutual fund has risen 45% over the past year, better than 99% its peers. During the past five years, the fund has returned over 8% annually, beating 96% of rivals.
Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.Why are small caps the place to be right now? Retzler: We are finding a lot of opportunity in individual names. It's a stock picker's market. There are a lot of themes out there that we can invest in, such as storage, because data is continuing to grow. We like backhaul-type investments that need to optimize their systems and a lot of those are specific products and those reside in small companies. There has been a big push toward solid-state disc drives. Is STEC the best way to play this trend? Retzler: The solid-state disc-drive market is just now coming to a new inflection point. A lot of OEMs are out there testing the drives. We expect a great adoption rate over the next few years. They do provide energy efficiency and when put into a tiered structure of storage, they can provide an optimized system with some very expensive equipment but optimizing it from a value perspective. One long-haul optical company you like is Infinera (INFN). Retzler: We do like to see the optimization of the optical network as data continues to grow, and videos and photos are uploaded on to the Internet. There is congestion in the back-haul of the systems and Infinera helps to optimize that for carriers and deliver high-quality performance to customers. One company you like is Entropic, which makes multi-room DVR technology. Tell me about this investment. Retzler: We like the whole home-networking opportunity that is coming. And one standard that a lot of the cable operators and satellite companies have embraced is Mocha. And Mocha chips are made by Entropic Communications. They are the leader. We are in the early innings of a great cycle for home networking, and the Entropic chips will be into a lot of products in your home.
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