NEW YORK (TheStreet) -- Investors may be following the potential merger between AT&T (T) - Get Report and T-Mobile, but the real company to watch is Vodaphone (VOD) - Get Report, says David Green, manager of the Hotchkis and Wiley Value Opportunities Fund (HWAIX) - Get Report.

Green also is bullish on

Microsoft

(MSFT) - Get Report

,

Hewlett Packard

(HPQ) - Get Report

and

Valassis Communications

(VCI)

.

The mutual fund, which garners four of five stars from

Morningstar

(MORN) - Get Report

, has returned 25% over the past year, better than 98% of its peers. During the past three years, the Hotchkis and Wiley Value Opportunities Fund has risen an average of 13.7% annually, better than 99% of its rivals.

Welcome to

TheStreet's

Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.

How do you pick stocks for the Value Opportunities Fund?

Green:

Just like the name of the fund implies, we look for stocks trading at low price-to-earnings ratios. We have about 25 analysts who work on our research team, which is really a distinguishing factor in the industry, and we look for companies that have a demonstrated history of earning money.

Microsoft shares have been range-bound in the past year, far underperforming major indices. Why is it a good buy now?

Green:

Microsoft is returning a very large amount of capital to shareholders. The stock is trading at about 9 times earnings. It's a dominant franchise. Because it has not done well in the past only means it's cheaper today.

Hewlett Packard has had some management issues over the past couple of years. Why do you want to jump into the stock now with a brand-new CEO?

Green:

At the end of the day, Hewlett Packard is a dominant franchise. It is trading at about 8.5 times earnings. The CEO has a certain amount of impact, but, in our opinion, not as much as people think considering the size and scope of the company. And if you step back and look at the overall franchise, the company is very solid and the stock is very cheap.

Everybody in America is concentrating on the potential merger between AT&T and T-Mobile. So why are you so interested in Vodaphone?

Green:

Vodaphone actually owns 45% of Verizon Wireless, a fact that many people don't know or have overlooked. Verizon Wireless is the dominant wireless carrier now. When AT&T and T-Mobile merge, they will also become very strong. But we do not think it will impinge upon Verizon Wireless' dominant position in the marketplace.

About a year from now we expect a huge amount of cash flow to start coming out of Verizon Wireless, and that will be paid to Verizon and 45% of that will go to Vodaphone. When that happens, Vodaphone, which already has a nice dividend yield, should be able to raise their dividend yield substantially, and we think the stock will do very well.

Outside of tech and telecom, you are bullish on coupon distributor Valassis Communications. Why do you want to own this company with the newspaper business in such a decline?

Green:

Valassis makes the majority of its money by distributing through the mail. The mail is the biggest beneficiary of people migrating away from newspapers when they have to distribute their coupons. So if you are a consumer-packaged goods company and you want to advertise, you may opt to go through the mail as opposed to newspapers. Valassis makes the majority of its profits through the mail. They have the wind at their back, and, currently, the stock is trading at about 7.5 times earnings, so we like the valuation as well.

-- Reported by Gregg Greenberg in New York.

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