10 Questions With Eaton Vance Large-Cap Value Skipper Michael Mach

Like the Hans Christian Andersen tale, this "Ugly Duckling" story has a happy ending.

When Eaton Vance unveiled its (EATVX)Tax-Managed Value fund on Dec. 27, 1999, fund manager Michael Mach was surprised by the Wall Street Journal headline on the fund: "Eaton Vance Takes Ugly Duckling Route."

When Mach launched his tax-efficient value offering at the height of the bull market, he took some early lumps for not easing up on his disciplined approach to value investing. But that perseverance paid off: As the bear market dragged down value and growth funds alike, his tax-managed fund returned 24.7% in 2000 -- trouncing his large-cap value peers and the S&P 500. The fund eked out a 1% gain in 2001; this year, the fund is down 20.7% so far -- putting him in the top 15% of his category.

Mach's other fund -- (EHSTX)Eaton Vance Large-Cap Value, which has been around since 1931 -- has turned in similarly impressive, peer-beating performances since he took the helm in December 1999. In 2000, it returned 14.8% and the 2001 and 2002 returns nearly identical to its tax-managed sibling. The fund's three-year average annualized return of 2.18% puts it in the top 6% of the large-cap value arena.

Click on Company Name to Jump to Mach's Comments on a Stock

Celestica

Elan

El Paso Energy

FPL Group

General Dynamics

OshKosh Truck

SunGard Systems

TXU

TJX Cos.

Valspar

Washington Mutual

Wal-Mart

TheStreet.com put a few questions to the erstwhile ugly duckling's skipper. Namely, how did he do it? Mach -- who, like Andersen's hero, is "happy but not at all proud" -- emphasized Eaton Vance's team of experienced analysts; a rigid sell discipline that enabled him to exit blowups like TXU (TXU); and a focus on companies with undervalued stocks and strong return on equities. He also applied some key insights from his previous work as a family therapist and psychology student.

Read on for Mach's disciplined approach to stock investing. Given his past performance and sound picks for the future, this story may have a happy ending for investors as well.