Adam Seessel, manager of the RiverPark/Gravity Long-Biased Fund, has plenty of advice for investors looking for contrarian plays in the coming year.
His mutual fund, which is still awaiting a ticker symbol, was launched Oct. 1 at $10 a share and recently traded at $10.29. The fund invests primarily in large-cap companies, but has the ability to short stocks as well.
At last check, the fund was 60 percent long, 10 percent short, with the balance in cash. Seessel previously co-managed a $200 million fund at Davis Funds.
Welcome to TheStreet's Fund Manager Five Spot series, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.
TheStreet: What is your outlook for large-cap stocks in 2011?
Seessel: Generally speaking, we are very bearish on the macroeconomic picture. And in our view, stock prices are fairly valued. So we are not seeing a lot to do out there.
TS: One stock that you are not constructive on is General Electric*. Why are you short GE?
Seessel: GE basically dodged the bullet in the financial crisis, but the day of reckoning is yet to come for them, primarily because they have a very toxic bank that holds a lot of subprime assets, both here in the U.S. and in Europe. They have swept a lot of these problems under the carpet. But, at some point, those bills are going to come due.
TS: One company you are fond of is Yahoo. This has been an unloved stock on the Street for a long time.
Seessel: Yahoo has a new manager, Carol Bartz, who is going to turn things around, in our opinion. Meanwhile, they are still the most visited website in sports, finance and news. And if you look at the assets on their balance sheet, you are basically getting the company for liquidation value. So any upside is free.
TS: Another contrarian name in your portfolio is Iron Mountain. Why are you partial to this stock?
Seessel: Iron Mountain is unloved. And, as value investors, that's what we look for. Iron Mountain is the leading document-storage provider in America and it's basically selling as if it is going to go out of business in 17 years, which is the average contractual life of one of its boxes. Here again, as with Yahoo, if it survives past 17 years, then it's gravy.
TS: Coal stocks have been very hot of late and you like Penn Virginia.
Seessel: This is a coal-royalty trust , so you are not owning a coal operator. Instead, you own a company that owns the underlying mineral rights to the coal. They just lease it out to the operators so the investor takes no so-called "black lung" risk. And they are very well-run, very cheap and pay a good dividend.
CNBC Data Pages:
*General Electric is the parent company of CNBC.
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About the author:
Gregg Greenberg, TheStreet Staff Reporter
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.