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Investing Specialists

Top Buys and Sells of Our Best-Performing Managers

Six managers with a good sense of what's working in the market, and what's not.

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By Greggory Warren, CFA | Senior Stock Analyst

With the first quarter of 2010 put to rest, we thought it would be interesting to take a deeper look at the most recent holdings, purchases and sales of those Ultimate Stock-Pickers that outperformed the market over the course of last year. We tend not to focus too intently on performance over time frames as short as a year. Instead, we prefer to put more weight on multi-year time periods whenever we're assessing our top managers. Still, we believe there is plenty that can be learned from the last year in the markets. After bottoming out in early March of last year, the S&P 500 Index (SPX) rallied strongly during the second and third quarters, returning close to 16% in each of these two quarters before posting more modest gains during the fourth quarter (6%) of 2009 and first quarter (5%) of 2010.

In a year when just about everything in the stock market rallied as strongly as the market itself did, it wasn't too difficult for our top managers to generate positive returns. Beating the benchmark index, though, which increased more than 45% (on a total return basis) from the end of March 2009 to the end of March of this year, was a more formidable hurdle. Of the 22 fund managers we track, a little over half of them--12 funds in total--beat the S&P 500 Index over the last year. Wanting to narrow the list down to a more manageable level, we decided to look at only those funds that had beaten the index by a sizable margin--in this case, 400 basis points--during the last year. This produced a list of six fund managers:  Yacktman (YACKX),  Fairholme (FAIRX),  Columbia Value & Restructuring (EVRAX),  Dodge & Cox Stock (DODGX),  Hartford Capital Appreciation (ITHAX), and  Oak Value (OAKVX).

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The Morningstar Ultimate Stock-Pickers Team does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.