Star Managers Miller, Nygren Stage Comeback

Nygren dumped his worst mistakes and stuck to his longtime investing strategy. That began paying dividends in 2008. As falling oil prices hurt energy stocks late in the year, Nygren bought Newfield Exploration(NFX), an operator of oil and gas wells. The shares rebounded when oil prices covered in 2009.

Another holding that surged in 2009 was eBay(EBAY), which jumped as investors regained their enthusiasm for online retailers. Big gains from such stocks enabled the fund to maintain its stellar long-term record. During the past decade, Oakmark has returned 7.6% annually, outdoing 98% of its large blend competitors.

The top-performing large-blend fund for the past 10 years is the Fairholme Fund, returning 95% in the past year. Holding a concentrated portfolio of about 20 stocks, manager Bruce Berkowitz makes bold bets. When fears about health care reform depressed drug stocks, he put 12% of the portfolio into Pfizer(PFE).

Last year, he loaded up on American Express(AXP), figuring that the company would thrive despite rising bad debts. The shares soared and he sold the position. Another big winner was Hertz Global(HTZ), which revived as demand for rental cars began to recover.

A winning bet on Ford(F) helped CGM Focus return 47% during the past year. But the fund trailed the S&P 500 partly because of some trouble with insurance holdings that occurred early in the year. Manager Ken Heebner dumped stocks such as MetLife(MET) and Prudential Financial(PRU), booking losses before the shares had a chance to rebound.

Shareholders should not be surprised that CGM sometimes trails the benchmark. Heebner runs a concentrated portfolio of fewer than 25 stocks. He trades quickly, taking big stakes in hot sectors. Most often his shifts have been on target, but he sometimes misses the mark.

Fidelity Contrafund has played it safe lately, emphasizing defensive stocks, such as consumer products giant Procter & Gamble(PG). That helped the fund outperform most large growth competitors during 2008. But high-quality names lagged in the rebound, and the fund returned 59% during the past year.

Manager Will Danoff buys growth stocks selling at reasonable prices. He has assembled a sterling record by outperforming most of the time in both up and down markets.

-- Reported by Stan Luxenberg in New York.

>To order reprints of this article, click here: Reprints