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Investing Specialists

Four New Ultimate Stock-Pickers Outperforming in 2011

Shifts in market leadership have turned the tables on 2010's top performers.

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By Jim Ryan | Senior Stock Analyst

With the market up more than 5% year to date, we thought we'd take a look at our best performing managers from last year and see what kind of results they've been delivering so far in 2011. As you may recall, Bruce Berkowitz was our top performer during 2010, with his  Fairholme (FAIRX) fund posting an annual gain of more than 25% versus a total return of 15% for the S&P 500 Index (SPX). Close behind him was David Winters at the  Wintergreen (WGRNX) fund, which posted a 21% total return for the year. These two managers were not only our top performers during 2010, but were also nominees for Morningstar's Stock Manager of the Year. Berkowitz (who was named Morningstar's Domestic Stock Fund Manager of the Year as well as Domestic Stock Fund Manager of the Decade in 2009) got the nod on the domestic side and Winters picked up a nomination for the international award. While neither manager walked away with the prize, investors in their funds were not too upset as they received yet another year of market-beating performance in the aftermath of the collapse of the credit and equity markets.

Equally as impressive was the performance of David Williams at  Columbia Value & Restructuring (EVRAX), which returned more than 19% last year (after recording a nearly 47% gain in 2009). Unlike many value mangers, Williams tends to stick with his winners long after they've overcome the challenges that led him to invest in them in the first place, which has meant his turnover has been practically nonexistent. During the last year, Williams eliminated a total of 14 stock positions, established new stakes in nine firms, and maintained holdings in 49 other securities. While running a slightly larger portfolio, Nick Kaiser has had even lower turnover in his fund, which is not only a byproduct of  Amana Trust Growth's (AMAGX) commitment to a disciplined research process but a strict adherence to its investment mandate--to limit the amount of short-term buying and selling that can be done by the fund. While Amana Trust Growth's 16% return last year might pale in comparison to the performance at Fairholme and Wintergreen, Kaiser did so by investing in less than half of the stocks that Berkowitz and Winters had available to them (given his fund's adherence to Islamic law, which prohibits investment in any firm that generates more than 5% of its revenue from alcohol, tobacco, pork processing, gambling, or the borrowing or lending money).

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

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