NEW YORK ( TheStreet) -- Walter Investment Management ( WAC) finally parted the dark clouds hanging over it in the first quarter.
Now Larry Pitkowsky, portfolio manager for the GoodHaven Fund, sees blue skies for the mortgage servicing company.
"They had strong earnings," said Pitkowsky. "They sold non-core assets. They put in a stock buyback authorization. And higher interest rates are better for mortgage servicing earnings. And by the way, there is a little bit of a short squeeze going on there."
Shares of Walter Investment Management have fallen 24% in the past year, although the stock price has more recently recovered some of those losses, jumping 39% in the past 3 months.
Pitkowsky said Walter is a good example of the type of temporarily downtrodden companies he seeks out at the GoodHaven fund. The GoodHaven Fund has dropped 20% in the past 12 months, although it has also regained some of its previous price, rising 4% over the past 3 months.
"We are trying to put together a portfolio of companies where there is a lot of upside and not a lot of downside, and that means wading into areas where they are unpopular currently," said Pitkowsky.
Another company high on Pitkowsky's list is WPX Energy ( WPX). Shares of the Tulsa, Oklahoma-based driller collapsed with oil prices last year, but have made a strong 19% comeback in the past 3 months as energy prices have stabilized.
"They have a wonderful new CEO in Rick Muncrief," Pitkowsky said. "He has cut costs. He has sold non-core assets for more than we ever thought he could. He is bringing down costs even further. And we think the business can be very profitable even at these prices, and the assets are worth about twice the current stock price."
Staying in the natural resource sector, Pitkowsky is a fan of Barrick Gold ( ABX), which is up 9% year-to-date, after falling 38% in 2014. Pitkowsky's bullish thesis revolves around the mining company's chairman of the board John Thornton, who took the top position last year.
"He is a very engaged and very active chairman of the board," said Pitkowsky. "He has a lot further to go on cost reductions. He is going to bring them back to their glory days where they were the low cost operator. He is reducing debt. And he is really agnostic on the price of gold and we think they can do well whether the metal is weaker or stronger."
Finally, Pitkowsky is a fan of Dundee Corporation ( DCA) and especially its management, which is led by the Goodman family. Like his other picks, the Toronto-based conglomerate has seen its shares roughed up in the past year, but has more recently started to make a strong turn upward. The company's stock has surged 15% in the past 3 months, after a 36% drop in 2014.
"While Goodman is not a household name down here, up in Canada they are well regarded and we think they are going to be better known down here," said Pitkowsky.