NEW YORK ( TheStreet) -- Hurricane Sandy has been devastating for the Northeast; nevertheless, it could be good news for timber stocks as the region rebuilds, says Michael Underhill, portfolio manager for recently launched Capital Innovations Global Infrastructure, Timber and Agribusiness Fund (INNAX).
Welcome to TheStreet's Fund Manager Five Spot, where top fund managers give their best stock picks and views on the market in a five-question format.
What is your view of the economy and how will Hurricane Sandy affect it?
Underhill: We are in a high-volatility, low GDP growth environment so we believe that investing in food, forests and fuel will enable us to outperform. We have been focused in timber and forestry in holdings like Plum Creek Timber (PCL - Get Report) and diversified wood products exposure through Louisiana Pacific (LPX - Get Report). With the housing recovery and reduced supply of lumber and timber, there has been significant leverage to the upside in these positions. Confidence among U.S. homebuilders climbed in September to the highest level in more than six years, adding to signs of progress in residential construction.Finally, the economic impact of Hurricane Sandy reflects an initial $10-20 billion in total property losses, though this figure could end up being significantly higher. The "re-roofing" effect will keep lumber markets very tight well into the spring. A lot of the roofs were not just on your average priced house. What is your top stock pick? Underhill: I would say our favorite is Louisiana Pacific. Pine lumber prices in the U.S. South continued to rise in September and are now 35% higher than year earlier levels. LPX will benefit from higher lumber, OSB