Top-Ranked Fund Is Bullish on Commodities

NEW YORK (TheStreet) -- Commodities have gone soft but rare-earth metals will remain in demand for years, says Marshall Berol, manager of the Encompass Fund (ENCPX). He owns metal miners including U.S. Antimony Corp. (UAMY) and American Vanadium (RMRCF.PK).

The mutual fund, which garners five stars from Morningstar ( MORN), has returned 52% over the past year, better than 99% of its peers in the world stock category. During the past three years, the fund has risen an average of 17% annually, again outpacing 99% of its Morningstar 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.

Why are you bullish on commodities stocks now?

Berol: We have been for a number of years and we remain so. Gold is near an all-time high. Silver has backed off some, but a number of the other commodities are still doing well. We think they will certainly continue to do so in the future.

What is your investment thesis behind U.S. Antimony Corp.?

Berol: This company mines and processes antimony which has uses as a strategic metal both for consumer and military purposes. It's mostly sourced out of China and corporations and governments that use it both want another source available. U.S. Antimony has risen from about 40 cents earlier this year to about $2.50. We like it a lot and think it has a lot more to run.

Another strategic metal company in your portfolio is American Vanadium. Why is vanadium an important metal to own?

Berol:Vanadium is used for various purposes. One of the major oncoming purposes is in batteries for utility usage. Not car batteries, but large batteries. Vanadium is a great component for storing energy, and American Vanadium is in the process of starting a vanadium mine in Nevada. We think it's a very attractive situation.

Why is Exeter Resources (XRA) your favorite gold play?

Berol: Exeter Resources has a major gold miner and copper project in the Andes Mountains in Chile. I have been there and seen it. They have said that they will ultimately have 30 million ounces of gold and a few billion pounds of copper there. We think this is a company that has done well in the past and will do even better in the future.

There is a lot of worry about uranium stocks following the German decision to abandon their nuclear plans as well as the nuclear meltdown tragedy in Japan. So why do you like Uranium Energy Corp. (UEC) as well as UR-Energy (URG)?

Berol: Uranium Energy Corp. is producing and UR-Energy expects to in the next year or so. There is still a great demand for uranium to fuel nuclear plants around the world, both the existing ones and the ones coming online. The Germans said they will phase them out over the next 11 years and the Japanese have taken some offline, but there is still a supply/demand imbalance for uranium that should bode well for prices.

-- Reported by Gregg Greenberg in New York.

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