KANSAS CITY, Kan. (
) -- Elizabeth Jones, co-manager of the
Buffalo Large Cap Fund
, says she's avoiding commodities because she expects price increases to trail economic growth.
The fund, which is rated four stars by
, has risen 49% this year, better than 95% of its peers. During the past 10 years, the Buffalo Large Cap Fund has returned an average of 1.9% annually, better 90% of its Morningstar rivals.
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Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.
Are you a bull or bear?
The Buffalo Large Cap Fund has appreciated almost 50% year to date. While we do not expect similar returns in 2010, we continue to find high quality companies trading at very reasonable valuations. We are long-term investors and we invest in companies that are beneficiaries of the "Buffalo long-term trends" -- quantifiable trends driven by demographic, technology, industry and global developments -- and that conform to our strict fundamental valuation analysis. Given our long-term orientation, and the fact that we run a concentrated portfolio with low turnover, we believe over the intermediate to long term, this strategy will deliver superior performance and we welcome like-minded investors.
What is your top stock pick?
is one of our top stock picks. Gilead is the leader in HIV treatment. We believe that Gilead's portfolio of both marketed and pipeline products to treat HIV offer life-saving efficacy with limited risk and are cost effective. We are also enthusiastic about the company's assets that address cardiovascular and pulmonary disease. Despite impressive growth prospects, Gilead is trading at a historically low valuation. The management team is superlative.
What is your top "under-the-radar" stock pick?
We believe that
is a great sleeper stock. This consumer-staple company is a "beneath the radar" approach to the healthy living trend. Approximately 40% of General Mills products are healthy food options. We see the U.S. consumer migrating more and more toward healthy alternatives, and we believe companies like General Mills will see growth well in excess of GDP over the intermediate to long term.
What is your favorite sector?
We have isolated 24 well-defined, intuitive, growth trends that guide the top-down investment process. Then we do rigorous bottom-up analysis to isolate the companies that are best positioned to benefit from those trends. We are diversified across the trends to limit risk. Having said that,, relative to our benchmark, the
Russell 1000 Growth Index
, we are meaningfully overweight in the health care and financial sectors.
What sector or stock would you avoid?
Typically we are not invested in commodities which we believe over the long term will grow at the rate of inflation or below GDP growth. However, we do invest in companies that improve the productivity of commodities such as
, whose CropScience division sells products to improve the farmer's crop yields, and
with the much anticipated 787 Dreamliner, which has 20% better fuel efficiency.
Reported by Gregg Greenberg in New York
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.