The auto and reinsurance industries are under one portfolio manager's radar, and he predicts high yields from those segments over the next three years.
Laton Spahr, RiverSource Investments portfolio manager, told "Morning Call" he likes Ford Motor and XL Capital .
He said the United Auto Workers contract scheduled for negotiation this summer and "good strategies" by Chief Executive Officer Alan Mulally both "stand a better than expected chance" of turning around Ford Motor.
As for XL Capital, he said the reinsurance industry is misunderstood largely because of the 2005 hurricanes. "The change in underwriting expertise that they've had, and the less exposure that they've taken on to the hurricanes, I think, is underappreciated," Spahr said.
He expects returns on equity within the auto and reinsurance industries to stay higher, for longer than investors expect. "Returns look very good over the next three years," he said.