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Counter-Intuitive Picks: Oil and Weapons

Andrew Fisher
Monday, 4 Aug 2008 | 1:18 PM ET

Four-star fund manager Scott Barbee has some counter-intuitive recommendations for adventurous investors. One company is in the oil patch, and the other deals in the always-volatile weapons business.

Barbee's Aegis Value Fund is up an average of 8.29 percent per year over the last five years.

Recommendations:

Barbee's top pick is Callon Petroleum, a deep-water Gulf Of Mexico oil driller and producer -- an interesting choice on a day when a tropical storm is raging in the Gulf and oil prices have taken a sudden plunge.

"A lot of funds are selling this because of the oil price dropping," Barbee admitted to CNBC. "We think the market is missing Entrada development that is supposed to come online next year."

Second on his list is Allied Defense.

"(It's) a micro-cap, so investors on CNBC should be careful of this one, because it can be moved around pretty readily," he said. "It trades at less than five times earnings...they make mortar shells, and sell them to foreign governments; it's a great business; backlogs have been building."

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Disclosures:

Disclosure information for Scott Barbee was not immediately available.

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