We think the stock is cheap because Wall Street is concerned about gross margins and inflation's effect on the top-line, and is afraid of Wal-Mart's ( WMT) recent entry into pet food. Just last month, private equity firm KKR signed a deal to acquire Pets at Home, a U.K.-based pet-supply retailer, for over 13 times EV/EBITDA. PetSmart's forward EV/EBITDA trading multiple is under 6 times. What is your top "sleeper" stock pick?Shircliff: One of the core components of our investment philosophy is finding companies that are undiscovered by Wall Street. Avatar Holdings ( AVTR) is a real-estate developer and homebuilder with significant land holdings in Florida and Arizona. The company has no Wall Street coverage. There is a high degree of insider ownership, which aligns the interests of the management team with shareholders, but this also limits liquidity. Clearly, this is a contrarian pick, but we like how the company is positioned. Avatar's market cap is only $200 million, but it has over $100 million of net cash on its balance sheet and has been buying back its debt at significant discounts to par. And, while most of its competitors are trying to raise cash and just survive, Avatar is acquiring real estate at significant discounts to its intrinsic value. Avatar purchased the gated retirement community Seasons at Tradition in Port St. Lucie, Florida, which has over 300 acres and includes over 1,000 lots with varying degrees of completion. It was originally owned by the now-bankrupt Levitt and Sons. When the development was acquired by the lender, Levitt still owed $86 million in mortgage loans on the property. Avatar acquired the property from the lender in September 2009 for only $7.3 million. What is your favorite sector?Shircliff: We are bottom-up investors, meaning we build a diversified portfolio one company at a time. Our focus is typically at the company level, not the broader industry or sector. That being said, certain sectors often present a more compelling universe of opportunities. Currently, we are overweight in consumer staples. The sector is typically defensive in nature, but we've found many companies that have sustainable business models, generate consistent cash flows and have strong shareholder-oriented management teams. These are firms trading at discounted multiples and can prosper in good times and bad.