Eric Ende, manager of the

FPA Perennial Fund

(FPPFX) - Get Report

, puts a lot of weight in each of the fund's holdings, which he tends to own for years.

The mutual fund has risen 21% this year, double the returns of his peers. He also has beaten his rivals over one, three and five years. FPA Perennial gets four out of five stars from Morningstar.

TheStreet.com's Fund Manager Five Spot

is where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Are you a bull or a bear?

Ende:

We are more bull than bear now. We feel that the likelihood of systemic collapse is now greatly reduced and that the undoubtedly severe recession was well-discounted in stock prices at the first-quarter lows.

What is your top stock pick?

Ende:

Our methodology is fairly straightforward. We look for superior returns on capital, strong balance sheets and modest valuations. We have a concentrated portfolio of 30 stocks, and very long holding periods, typically over five years.

Our favorite stock right now is

Copart

(CPRT) - Get Report

, a processor of mostly salvage vehicles. It's the leader in its industry, with strong market share, technology, significant barriers to entry, and promising growth initiatives both in the U.S. and in Europe.

What is your best beneath-the-radar, or sleeper, stock pick?

Ende:

Below the radar, we like

Signet Jewelers

(SIG) - Get Report

, the leading operator of chain jewelry stores in the U.S. and in England, selling here under the name Kay's. There have been significant failures of competitors, both large and small, improving Signet's already strong position and likely to increase its market share and profitability.

What is your favorite sector?

Ende:

We are big fans of health care stocks, a hedge on the strength and timing of the recovery. Our companies in the sector will generally benefit from growth in life-sciences research and have little or no reimbursement risk.

Which sector or stock would you avoid?

Ende:

We are staying away from financials. They are highly leveraged, politicized, commodity businesses. We feel it's best to steer clear of the banks right now.

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.