"She destroyed a lot of capital by under-investing in the business. And we are hoping that the new CEO, whoever that may be, will be able to galvanize the business. That said, the valuation is very inexpensive and while we wait there's still a 5% dividend," says Strauss.
The no-load $194 million fund focuses on companies with prudent and sustainable business models. It a full garners five stars from Morningstar (MORN) and is up 4% over the past 12 months, putting it in the top 20% of Morningstar's mid-cap value category. Over the past 5 years, the fund has returned an average of nearly 6.5% annually, outpacing 99% of its Morningstar rivals.Strauss is also a fan of food packaging company Sealed Air (SEE), which is trading at a discount in his view in the wake of the company's Diversey acquisition last fall. "It's trading with a double-digit cash flow yield and a nice dividend yield, and, most importantly, we think there's a lot of upside to business," says Strauss. Strauss also sees a housing comeback on the horizon and is playing it through Weyerhaeuser (WY), which is now a REIT yielding 3%. "For a long time we were very bearish on housing, but we think there is a fair amount of pent-up demand building. It converted to a REIT a few years ago, so there's a nice dividend and as this business grows, it should treat its shareholders very well," says Strauss. Finally, Strauss is bullish on insurance broker Willis Group (WSH), which he says will benefit from increasing insurance premiums. "Right now insurance companies aren't making much money because their investment portfolios have very low yields. They need to raise prices in order to keep their ROEs in the high single, low double digit range and Willis will be a beneficiary of that trend," says Strauss.
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