Berkowitz looks for undervalued companies with strong management. When he finds one he likes, he makes a big bet: The portfolio holds only 15 to 25 stocks. He also has 20% of the fund in cash so he has the flexibility to jump on opportunities."Right now everyone is concerned about how the Obama administration will change health care. That fear has caused the stock prices of many of these companies - particularly the health insurers - to fall off the proverbial cliff. When we see that kind of stress, we start to get interested."We assess companies based on the amount of cash that they generate. And we don't think Obamacare will greatly dampen profits for many drug, insurer, and hospital companies, which is why these stocks now make up about a quarter of our holdings.""These insurers are both generating a significant amount of cash, and that's not reflected in their low stock prices. We don't believe the government will take over providing health insurance, despite fears otherwise. Humana and WellPoint have 4% to 5% profit margins: That's certainly not egregious. They are providing essential services in a cost-effective manner - something the government does not do. Reason eventually prevails.""A decade ago Pfizer sold for 35 to 45 times earnings. Today it sells for about 10 times earnings, partly over concerns about health-care reform. But investors have also been dissatisfied with Pfizer's and Forest's recent performance. A decade ago people overpaid for drug stocks because they were overly optimistic about earnings potential. Today that pendulum has swung so far the other way that some stocks are priced below their true value."