Fund Manager: Safest Buys Are Cash-Rich

With a new stock blowing up almost every day, Wall Street has gone from equity market to mine field. Five-star fund manager Warren Koontz says investors can steer clear of trouble by focusing on a company's debt obligations and cash generation.

"We don't want any debt to be rolling over in the near term, so we are looking at debt expiration," says Koontz, who oversees the $430 million (LSGIX Quote)Loomis Sayles Value Fund. "We also like cash. Not only cash-flow generation, but net cash on the balance sheet."

Like most mutual fund managers, Koontz has been hit hard by the bear market, down close to 37% year-to-date. Nevertheless, he is still beating the S&P 500 by 4.7 percentage points over the past five years. The fund holds nearly 70 stocks and has turnover of 41% per year. ...