Ken Heebner, who is the long-time manager of the CGM Funds, isn't afraid of risk. He often concentrates his portfolio on a few industries and is willing do dump stocks if conditions change.

Over the long run, the strategy has been a winner. But, of course, there can be some scary moments, such as this year (but who hasn't had troubles?)

So, now what is Heebner focusing on? It's the financials. Interestingly enough, up until summer, he was aggressively shorting the sector (this is according to the Wall Street Journal, which is a paid publication).

Let's face it, the banks and insurance companies are getting a flood of government money, with fairly easy terms. And, as seen with recent trouble-shooting with Citigroup (NYSE: C), it looks like the U.S. government won't let the big banks go down. In fact, Heebner has a $1 billion dollar position in Citigroup. What's more, about 40% of the CGM Focus fund is in financials.

Heebner is encouraged by the historically low levels of key metrics. For example, the top 20 U.S. banks have a price-to-tangible book value of 1.1X. This compares to the typical multiple of 2.7X.

OK, what are other financials that Heebner likes? Some include Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC) and even Banco Bradesco (NYSE: BBD).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website.

This market is tough. Pros and novices alike are having a tough time. Particularly in a down market, a market commentators like to call a ""stock picker's market," I find it illustrative to dig deeper into the holdings of those special professional money managers that have found a way to make a go of it.

Take the CGM Focus (CGMFX) fund. This fund consistently shows up at the top of 1-year, 3-year, and multi-year best performers. CGM Focus has returned on average 37% per year for the past five years. While this is absolutely no guarantee that it will continue to perform like this, fund manager Chuck Heebner seems to have the special sauce -- at least for now.

So, what has been so successful for the fund?

Commodity picks like fertilizer plays Potash (NYSE: POT) and Mosaic (NYSE: MOS) have been big positions and have been big winners. Steel plays like US Steel (NYSE: X) have performed very nicely for CGM as well.

Looking at what worked is somewhat like looking into a rear-view mirror. These gains were in the past. What's Heebner and team buying now?

"When our most recent measurement period has been down, it is useful to look for funds that fell less than the market while also evidencing attractive reward/risk characteristics over the past three years," says Thurman Smith.

The editor of Equity Fund Outlook -- a fund advisory service that places its greatest emphasis on manager expertise -- takes a looks at a trio of mutual funds -- Permanent Portfolio (PRPFX), CGM Focus (CGMFX) and Leeb Focus R (LCMFX).

"Permanent Portfolio is not strictly an equity fund, but does have a structured diversification that is broader than most sector funds.

"Preservation of buying power over all market conditions is the idea behind this unique offering, which maintains a fixed allocation of 25% in gold and silver, 10% in Swiss franc assets, 15% in U.S. and foreign real estate and natural resource companies, 15% in aggressive domestic stocks, and 35% in U.S. government paper.

"Permanent Portfolio has not beaten the market over very long periods, but it returned 8.5% annualized over the last fifteen calendar years vs.10.5% for the market, and over the past ten years its annualized return of 9.4% beat the market's 6.3%. It did this with a Risk Exposure half that of the market. (One reason for therecent good performance is its gold allocation.)