SEATTLE ( TheStreet) -- Bill Smead, manager of the Smead Value Fund ( SMVLX), expects U.S. stocks to rise next year, but he's wary about commodities and emerging markets.
The large-cap value fund has risen 32% this year, better than 85% of its Morningstar ( MORN) peers. The fund's top holdings include eBay ( EBAY), Franklin Resources ( BEN) and Starbucks ( SBUX). Welcome to TheStreet's 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?Smead: We are bulls. The point of maximum pessimism was in early March and was probably a 30-year extreme in pessimism. It will take years to work off the negative sentiment toward stocks. Also, it has been eight years since large-cap, recession-resistant quality stocks were in favor on either a relative or absolute basis. As U.S. households increase their saving and commit some of the massive amounts of cash in low-interest liquid accounts to the stock market, brand-name companies could get a large part of the affection. What is your top stock pick?Smead: eBay is our top stock pick and the No. 1 position in the Smead Value Fund. We are "bottom up" stock pickers and this one has something for everybody. First, eBay is a sum-of-the-parts story. They own PayPal, Bill Me Later, StubHub, 28% of Craigslist, 30% of Skype, five of the six largest online classified advertising firms in the world and the greatest online auction business in the world. They're also sitting on $5 billion-plus in cash, with no debt.
Guests include James Dailey, portfolio manager for the Team Asset Strategy Fund, Bill Smean, portfolio manager for the Smead Value Investor Fund and Bryan Ashenberg, portfolio manager for the TheStreet.com's Breakout Stocks portfolio.