Don't Overlook AIG, Genworth

NEW YORK ( TheStreet) -- Investors taking a hard look at insurers in the wake of Hurricane Sandy, as well as recent economic reports, should certainly consider buying shares of AIG ( AIG) and Genworth ( GNW), said David Marcus, portfolio manager for Evermore Global Value Fund ( EVGBX). The $70 million mid-cap blend fund has returned 5% year to date.

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

What is your view of the economy?

Marcus: We feel the economy is slowly improving here in the U.S. The European markets are still declining, but companies are taking advantage of the crisis themselves rather than waiting for their countries to create a solution. Corporate profits are ticking higher, and consumers are slowly stepping up their spending. However, there remains to be significant uncertainty generally.

What is your top stock pick?

Marcus: It would have to be AIG at this juncture. Right now, investors are looking backwards here to a bailed-out company that was taken over by the government and was one of the worst culprits of the financial crisis. Looking forward, we see a company that is trading at just over 50% of book value, has cleaned up its balance sheet and gotten rid of most of the crisis assets. We like their aggressive management, the fact that non-core assets continue to be sold and that they have a massive stock buyback program. The US government now owns 15.9% of the company, which is down from 92% a year ago. This stock is too cheap.

What is your top "sleeper" or "under the radar" stock pick?

Marcus: Interesting question, but I think I would say Genworth. This insurance company is in life, mortgage insurance and long-term disability primarily. Genworth was decimated during the financial crisis and the mortgage insurance business was the worst culprit. However, today the company is aggressively refocusing itself and selling non-core holdings, it has fired its CEO and is looking to IPO its Australian mortgage insurance unit late in 2013. The stock trades at about 20% of book value and earnings are slowly turning the quarter and improving across the businesses.

What stocks or sector would your sell or avoid right now?

Marcus: I would avoid the most cyclical stocks, pulp and paper, and those that are oil-related. We would rather focus on company-specific special situations where we can value the assets as opposed to hoping a commodity trades higher.

What is your outlook for 2013?

Marcus: Our outlook for the stock market is generally better as corporate profits continue to surprise us with higher than expected results. The election outcome will have ramifications for the economy and the markets, but the first year after an election is usually a period of assessment and not big changes regardless of who wins.
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