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Mutual Fund Report: Five Five-Star Managers

By CNBC.com Staff

Five-star mutual fund managers are not nearly as rare as five-star generals or five-star restaurants, but they're still a rare breed. "Squawk On The Street" rounded up five of them, all of whom were making their network debut.

Dan Chace -- Wasatch Micro Cap (WMICX)

Of all the funds tracked by    the Wasatch Micro Cap Fund is the top performer over the last ten years, sporting a 24.8% annualized return.

Chace and his team look for high quality companies, great management and reasonable multiples. "It's pretty basic," says Chace.  But he admits to having a harder time finding the right companies in the U.S. these days.  "Singapore has been a very successful place for us."

Among the companies you'll hear about: SM&A, a business consultant, and Big 5 Sporting Goods, who stores in the western U.S.

Investing in Uncharted Territory

Christopher Alderson -- T. Rowe Price Emerging Europe & Mediterranean (TREMX)

One of the top performers tracked by Morningstar for the past five years, the T. Rowe Price portfolio manager

The fund is up 5.46% so far this year. Over three years, it is up 39.93%. Over five years, its annualized return is 35.95%.

The fund has a "very broad brief", says Alderson, but currently owns a lot of companies in Russia, Egypt and Israel.

The fund is heavily weighted in financials  (45%) and energy (17%) as of March 31, 2007. Lukoil is among the top ten holdings and the company presently has 52% invested in Russia.

Theodore Bigman -- Morgan Stanley Inst. International Real Estate (MSUAX)

One of the top performers tracked by Morningstar for the past five years, Bigman also runs the Five Star-rated Morgan Stanley Inst. US Real Estate A (MSUSX).

Year to date, the fund is up 4.14%, vs. 38.21% over three years and 32.41%  over five.

Bigman says year-to-date,  "Asia has been doing the best." The region has "some of the best office markets in the world" as vacancy rates are low.

Bigman also likes U.S. hotel stocks, particularly at the high end, such as Starwood and Hilton.

More Fund Managers

Investing in Junk

Tom Soviero -- Fidelity Leveraged Company Stock (FLVCX)

One of the top performers tracked by Morningstar over the past five years (up 31.20%), the fund is off to a hot start in 2007 (13.81%). Over three years, the annualized return is 24.73%.

The fund buys the stocks of companies with a lot of debt on their balance sheets. "Debt can enhance equity returns," he says. The shipping industry -- which "leveraged up" during a period of consolidation -- is a good example.

As of March 31, the fund's top 10 holdings accounted for about 24% of the portfolio. The fund was heavy on energy. Forest Oil was among the top ten holdings. Semiconductois ranked second at about 19%. Soviero is bullish on tech, expecting a wave of capital spending. Semiconductors is one of the top holdings.

The fund has a low turnover rate (20%), as Soviero likes to hold stocks for three to five years.

Profiting Amidst Adversity

Edward “Ned” Gray -- Delaware Global Value A (DABX)

The third year is the charm -- so to speak -- for this fund manager. The 22.98% gain over three years, tops the five-year performance of 18.08%. Year to date, Gray's fund is up 6.18%. Total and BP are among the oil holdings in the top ten. Coca-Cola and WPP are also there. Banking and finance is the top sector, up almost 15% as of the end of March.

Gray says he takes "a contrarian view" and looks for stocks that are out of favor. Two examples you'll hear about are the Lafarge, the French constuction giant, and CGI Group, a Canadian Internet services provider.