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Stock Strategist

All-Star Managers' Bear-Market Bargains

Our favorite stock-pickers take advantage of falling prices.

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While most investors are familiar with Warren Buffett's advice to "rejoice when markets decline," many have a hard time putting it into practice. However, this is not the case for the small group of all-star fund managers we follow.

Each quarter, Morningstar stock analysts review the shareholder letters and SEC filings of our favorite mutual fund managers in an attempt to learn from the best minds in the investment business. With the S&P 500 down more than 10% over the past 12 months, most of the managers on our list are stepping up their buying activity. In fact, two funds on our list-- Sequoia (SEQUX) and  Longleaf Partners (LLPFX)--recently reopened to new investors in order to take advantage of the ongoing clearance sale in stocks. As the managers of the  Tweedy, Browne Value Fund (TWEBX) put it, "2008 could be a terrific year for planting the seeds from which attractive future returns will grow." Below is the full list of fund managers whose letters we examined:

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Jim Sinegal has a position in the following securities mentioned above: BRK.B, AIG. Find out about Morningstar’s editorial policies.