Q: What other values do you see? A: Morgan Stanley [MS], one of my favorites. There's been a lot of headline pressure on the stock, thanks in part to big write-downs connected to subprime mortgages. There's a lot that isn't right about Morgan Stanley. Shame on Morgan Stanley for getting involved with this. They have a good management team, though I'm surprised they made this mistake. But having said that, this is a rare occasion to buy a brokerage of this quality at around 1.2 times tangible book value.

Q: Another of your holdings is Lehman Brothers. What value do you see there? A: Lehman Brothers [LEH] probably managed itself a little better [than some other Wall Street firms] through the recent difficulties. It's a big company, but they've also got, perhaps, a little more strength in some of the fixed-income areas than Morgan Stanley. As an investor, I like to spread the risk a little bit. As you can see, companies like Citigroup [C] have been clocked, whereas Lehman and Morgan Stanley, at least on a relative basis, haven't been hurt quite as badly. Lehman is in a little bit better shape. Perhaps it's a little pricier, but its earnings are going to stay a little more predictable.

Q: Lehman is trading in the high-40s, down from the mid-80s just over a year ago. What else do you like? A: Petroleo Brasileiro [PBR], or Petrobras. The stock has gone more or less straight up in the past few years, although it sold off a bit last week. How does this holding jibe with your value-stock philosophy? It's not cheap. But there has been a disbelief that energy prices can stay high, and that's reflected in the discount to net asset value that the market gives to most of these oil companies. With crude oil at around $100 per barrel, Petrobras has a net present value of around $140 a share.

Q: What else tempts you? A: Invesco [IVZ], the asset manager now based in Atlanta. They previously were based in the U.K. The business includes the PowerShares ETF franchise and AIM Investments. As a firm they've had their ups and downs. There's a consensus that the market is probably in a trading range and not going to go up a lot this year. So it is a reasonably contrarian bet that the market will do better than the consensus right now. They should earn about $2 a share this year. With any kind of luck, they grow 10% a year in the next couple of years. The stock was at 25 recently, roughly 12 times earnings. You are talking about a very good company that's well managed selling at 12 times. It's a good buy.

How about one more name? Freeport-McMoRan Copper & Gold [FCX] is a relatively new holding. I've probably held it for a year. It's an international mining company with a big global footprint. It's one of the largest copper producers in the world, and also mines some gold. Freeport is an American company but most of its reserves historically have been in Indonesia, and it has recently made some acquisitions in Chile. It's a commodity play, no doubt about it. If the price of copper goes down, this company will not be a good performer.

Q: What have you been selling recently? A: I sold Citigroup within the past month.

Q: Because it's a value trap? A: In hindsight it was a big value trap, yes. And I unloaded Freddie Mac [FRE] and Sallie Mae [SLM]. I tried to get rid of holdings that I just didn't understand or didn't have the confidence in.

Q: Because it's a value trap? A: In hindsight it was a big value trap, yes. And I unloaded Freddie Mac [FRE] and Sallie Mae [SLM]. I tried to get rid of holdings that I just didn't understand or didn't have the confidence in.