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Finding Winners Where No One Else Will Go

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Inside a multi-cap value portfolio with stellar long-term results.

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Minyanville: When did you get in there?

Croft: We were buying in March when it was in the teens. Now it is at $30, and we still think the stock is a good long-term holding.

Minyanville: Why is Freeport-McMoRan Copper & Gold a smart bet?

Croft: We like Freeport a lot. The supply-demand issues in copper are real. India, China, and the emerging markets will continue to grow. Freeport will benefit.

Minyanville: Do you also use these energy and copper names as a hedge against inflation? Is that part of the attraction?

Croft: Yes, that is a piece of the puzzle. We are very bottom-up here, looking at every company for its own merits. At the same time, in this reflationary environment, we want to have assets in the ground.

Minyanville: One of your favorite sectors right now is timber.

Croft: Yes, and there we like Weyerhaeuser (WY), which owns seven million acres of timber worldwide. The value of their timberland acreage is equal to the market cap. We also think the company will convert to a REIT when they can, and that will be a catalyst for the stock.

We own Plum Creek Timber (PCL) too, which is a REIT yielding 4.75%. If you think housing will come back over time, these names won't move like Pulte Homes (PHA) or Lennar (LEN), but they will benefit.

Minyanville: How about the health-care sector? Are you finding opportunities there?

Croft: We are focused on Aetna (AET) and UnitedHealth Group (UNH). People think these companies will be in a lot of trouble with health-care reform. But Aetna, which trades at 9.5 times 2010 earnings and has tremendous cash flow, is being priced in for bad news to continue. Now, it won't be a smooth ride in these stocks because headlines are driving them. But we think, if you buy Aetna now, it's a good entry point.

Minyanville: The fund has a strong long-term track record and a solid, experienced management team, but it continues to fly under the radar in a lot of ways. Does that bother you? Being overlooked?

Croft: No, it does not. The fund had just $25 million a couple years ago. So we have enjoyed a lot of big growth. We are stock pickers here, doing our research and finding ideas. We would love to grow the fund over time and we think, with our track record and consistency, investors will be interested.

Minyanville: Thanks for your time, Russell.



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