NEW YORK (TheStreet) -- Like the name of his mutual fund suggests, Thesis Flexible Fund (TFLEX) manager Stephen Roseman keeps his options open. He favors large-cap tech, hates mall REITs and finds alluring small-cap firms such as Global Ship Lease (GSL) and West Marine (WMAR).
The mutual fund has returned 3.4% over the past year, putting it in Morningstar's (MORN) 69th percentile for long-short funds, which can bet on declines in share prices.
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.
How do you manage your mutual fund so it acts like a hedge fund?Roseman: It's a very traditional global long-short fund. What we do is manage risk. Before we think about return, we think about what the downside is in an investment. The idea is really to preserve capital while trying to grow it. One sector in which you are bullish is big-cap tech. You own stocks like Microsoft (MSFT),Cisco (CSCO) and Intel (INTC). Why do you like these companies when there is so much worry about their growth potential? Roseman: The holy trinity used to have concerns about domestic GDP and investors were exclusively worried about domestic GDP. Today they are beneficiaries of global GDP and, frankly, they benefit as the world becomes more wired and wireless. They are trading at the cheapest multiples they have ever traded at. If you net out cash, they are trading at high single-digit multiples of earnings. One small-cap company you like is Global Ship Lease. Tell me about this one. Roseman: It is somewhat of a complicated story, but it has a dividend that is payable in arrears. Its accumulating a dividend that will be payable later in the spring. In addition, it has an ongoing dividend which will be about 92 cents. As a consequence, it's trading about half the valuation it should be on a yield basis. Staying with the nautical theme, you own West Marine. Roseman: The punchline for West Marine is that they are the last man standing. The industry consolidated and, frankly, collapsed during the downturn. They are a boat-supply retailer so they cater to both recreational boaters as well as professional boaters, in other words, lobstermen and fishermen. They are benefitting from the changes in the industry. They are trading at a 9% free cash flow yield and have a fortress balance sheet. And they will benefit from moves they are making in their own business as well as the recovery in the broader economy.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV