Top fund manager David Herro has been buying up stocks in an extremely unloved area of the market: European banks. “If you look at our portfolio, we’re most overweight Europe and within that, European financials,” Herro tells CNBC. “The European recovery has legs and this is the best way to play it.” Herro says Europe still needs to repair its microeconomy. “But if you look at the various components of Europe,” he says, “we’re starting to see improvement,” particularly in Germany and the U.K. CNBC says Herro has recently picked up shares of Credit Suisse, Intesa Sanpaolo, BNP Paribas, Lloyds and Allianz. Herro also talks about why he’s having trouble finding value in emerging market stocks right now.