Huber also holds Global Cash Access (GCA), which provides ATMs and cash advances in casinos. Earnings suffered when gambling in Las Vegas slowed during the financial crisis. Margins should improve as the economy revives.
Wells Fargo Advantage Small Company focuses on stocks that fall in the cheaper half of the Russell 2000 Value Index. The portfolio managers are particularly interested in names that recently slipped into the cheapest 20% because of temporary problems. During the past five years, the fund returned 25.3% annually, outdoing 87% of peers.
Last year, the portfolio managers began shopping for real estate investment trusts. The shares had plummeted when markets began fretting that rising interest rates would punish REITs. A holding is Education Realty Trust (EDR), which operates student housing. The shares dropped more than 25% from the high as some investors worried that online courses would deter students from living on campuses. Wells Fargo portfolio manager Doug Pugh argues that demand remains strong for Education Realty because it has developed superior housing. "Their new properties compete against dormitories that were built in the 1950s," he says.
At the time of publication, the author held no positions in any of the stocks mentioned.Follow @StanLuxenberg This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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