Managers on Defense and Offense

Some managers we've talked to in recent weeks are seeing opportunity in the market's volatility amid ongoing concerns over economic recovery and European sovereign debt. Others, however, have been taking a more cautious view. Below, we feature a selection of comments from Morningstar video interviews. To get the managers' full take, click their names to watch the entire video report.

Comments on Opportunity
Kimball Brooker, First Eagle
"Our cash has come down roughly 150 basis points from where it was before, before this recent downdraft, as we have found the companies that we're interested in drifting into our buy range, which is � we typically think of as a 30% to 40% discount from our estimates of their intrinsic value."

Bruce Greenwald, Columbia Professor
"I don't want to say it's once in a lifetime opportunity because we had a better opportunity back in March of '09. But it is again starting to be an extraordinary opportunity to put capital to work, where in the long term it's fully protected, and you're going to make a really more than adequate return."

Curtis Jensen, Third Avenue
"The pullback has definitely helped us in terms of getting much closer to implementing some new ideas in the portfolio� And we continue to identify new ideas. Whether it's industrials, whether it's technology, financials, and we're even peeking again back at the energy sector."

Sarah Ketterer, Causeway
"The more Greek bond yields rise and the more this contagion effect supposedly creates problems for Spain, for Portugal, Italy and the other peripheral European countries enduring a huge amount of strain on their bond markets, the more interesting the equities become. Now, this may sound a little bit heretical because why would anybody come near these stocks? But underlying many of them are fantastic businesses."

Kevin Preloger, Perkins
"Given the pullback, we think that there are more attractive opportunities out there. And we have taken advantage of the recent market volatility to add to those names that have more attractive reward-to-risk ratios as well, as reducing the positions where we don't have as attractive reward-to-risk ratios"

Mark Vaselkiv, T. Rowe Price
"We would classify ourselves as in opportunistic mode. We have been buying for the last four weeks. We started in the second week of May�Our expectation at T. Rowe Price is that, in general, the U.S. economy is showing very significant improvement, principally at the corporate level. We really like what we see in our companies. And our expectation is that over time the positive fundamentals of U.S. companies will overcome what's happening in Europe and countries like Greece and Portugal, et cetera."

Amit Wadhwaney, Third Avenue
"Europe, what this is beginning to present us with is an opportunity to buy and buy more. If you look at the most recent quarter's report, you will see that we've actually been expanding our ownership of a number of European financial companies, both in Continental Europe as well as in the U.K. If a company is unfairly tarnished, a very good company, by merely being in a bad neighborhood at the wrong time to no fault of its own, to my mind that presents a tremendous opportunity."

Mark Yockey, Artisan
"I added some of my own money to the fund. So I guess on a personal level I certainly think [valuations on European holdings] are more attractive. And on a professional level, some of the stocks have come down 15% to 20% in this correction, and we thought they are pretty cheap to start with. So right now, it's not a problem finding high quality names that generate a lot of cash that are extremely attractive. And we think, if you can take a longer term view, now is an extremely attractive time to look at international equities, not just in Europe, by the way, but equities around the world have come down."

Comments on Defense
Thomas Atteberry, FPA
"The leverage is still there. These companies are still too highly levered to exist unless growth is tremendous, but they just pushed the maturities out for a few years. So we still continue to see high yield as a problem, just the problem, the can got kicked down the road a couple of years."

John Bogle, Vanguard Founder
"There are not a lot of places to hide. If you don't like fixed-income investments like bond funds, or municipal, corporate bond funds, government bond funds, U.S. Treasury bond funds, or municipal bond funds, that leaves money market funds. And the yield on money market funds today is probably something like a tenth of one percent� So you have to do something, and you have to do something that will be more or less durable. So my response would be, first, I'm nervous about the fixed income markets, and therefore I would not use long maturities."

Jeffrey Gundlach, DoubleLine
"It seems that the valuations are more reasonable, but I'm looking for more downside on credit spreads. Meaning that they should widen and underperform U.S. Treasuries, probably for the rest of this year."

Steve Romick, FPA
"It's just harder for us to find ideas that are real great opportunities, terrific risk-rewards. That's doesn't mean the market can't go higher. It doesn't mean there aren't certain aspects of the market that are cheaper than others. But overall, it's harder for people who are deep value investors to put capital to work... And what the Fed has been doing, by adding so much into the system and guaranteeing so much and buying assets, as the Fed begins to pull back, what's going to happen is anybody's guess�We would argue that at best, we're looking at lumpy growth and then low to moderate growth over the next five years."

Komal Sri-Kumar, TCW
"This is a tread-water market as far as we are concerned. Meaning that you want to stay alive, you want to keep your head above water, and you want to do whatever you can for the next six months, nine months to earn your keep, so to say."

Sam Stewart, President, Wasatch Funds
"Caution I think is the hallmark. I think to me one of the things that would be tragic for investors is if '08 and '09 were really just a huge warning shot across the bow, and investors refused to really [recognize] that. And they said, OK, well, given this strong rally off the bottom we're back in business as usual, and I think that would be a big mistake."