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Morningstar Conference: A Not-So-Legendary Panel

Also, Susan Byrne admits outflows do hurt, and other odds and ends.
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CHICAGO -- Tuesday's Morningstar Investment Conference session titled "Legendary Managers" turned into an Ask-Bill-Miller-About-His-America-Online-Stock panel. (He says he's been selling AOL (AOL) .)

Maybe the session was ill fated from the start. After all, Miller, who manages the

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Legg Mason Value Trust and was Morningstar's manager of the year for 1998, has been in the limelight a lot lately.

The other "legendary" managers he was paired with have not.

Charles E. Albers of

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Oppenheimer Main Street Growth & Income and Elizabeth Bramwell of


Bramwell Growth are experienced and respected money managers with decades of experience. And in mutual fund circles, their names are even slightly recognizable. But you wouldn't usually hear them uttered in the same sentence with, say, Michael Price or Peter Lynch.

And the session's attendees -- as well as moderator Don Phillips, Morningstar's chief -- hardly seemed interested in what Albers or Bramwell had to say. Maybe that's because Albers' current fund has lagged the S&P 500 for five years, though that's not really his fault. He didn't start managing it until 1998. He had more "legendary" performance at his former job managing the

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Guardian Park Avenue fund, which outpaced the S&P in 1995, 1996 and 1997 under his guidance. And Bramwell manages a growth fund, which no longer seems the place investors want to be.

Perhaps the session should have been named, "Bill Miller and Two Other Portfolio Managers Whose Arms We Didn't Need to Twist to Sit in Front of 1,000 People for an Hour."

-- Joe Bousquin

Value Manager Recalls Tough Times

There must be a school where value managers learn canned answers to certain questions. They have become so predictable.

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Is value back? "It will come back. I don't know when." How did you respond when you started facing outflows? "I just stuck with the discipline. You can't take it personally."

That's why heads turned when Susan Byrne, speaking at a Tuesday session titled "Value Masters," answered otherwise.

"If I come in in the morning and find out I lost money, I do take it personally. Being out of favor is very difficult," admitted the manager of

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Gabelli Westwood Equity fund. The deep value fund ended March up just 3% for the past year. And although it ended up at the same asset level, $184 million, as a year ago, Byrne said getting through the growth-driven market has definitely not been easy. "I've got clients saying 'Why do I need you?'"

Of course, as value rebounded last month, times are not quite so bad. Byrne said she doubled the return of the S&P 500 in April, up 15% in one day. And that means she's not hearing quite the same tough talk from clients. One private investor, who fought through a crowd of reporters to shake her hand, told Byrne, "I just wanted to say thank you!"

The rebound in value also gave Byrne a chance to gloat about her call on


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, a stock she held for all of 1998, long before it was


cyclical value stock to get into.

Lately, the stock price has been running up like an Internet stock, leading her to observe: "It's my new best favorite stock," Byrne said. ""

-- Brenda Buttner and Joe Bousquin

Reconsidering Japan

David Lui, who manages the

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Strong International Stock fund, said he sees some encouraging signs in Japan, though he still has doubts about the sector. On the plus side, Japanese companies are realizing that giving employees a job for life has helped stagnate the economy, he said.

And as large companies like


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take a more dynamic approach to restructuring and cost-cutting -- which means layoffs -- Japan might be able to pull itself out of its malaise, Lui said.

But he's not bullish on the sector, despite its recent comeback. Through last week, Japanese funds were up, on average, 23.7% for the year, according to


. But Lui said he doesn't like the bad debt that Japanese banks have built up over the past decade and Japan's less-than-straight-on approach to dealing with its problems.

"The good thing about America is that we step up to the plate right away and take care of the problem -- remember the S&L crisis in the 1980s?" Lui said. "The Japanese aren't like that. They like to let their problems hang around for a while and not deal with them until they have to."

That kind of attitude is something investors should be wary of, Lui said, if the country's companies, banks and government continue with their roundabout ways.

"Remember that movie

Night of the Living Dead

?" he asked. "The Japanese are kind of like those people right now. They're wandering around without any souls."

-- Joe Bousquin

Odds and Ends

Ron Baron of

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Baron Asset fund said

Charles Schwab


makes up 20% of his portfolio, and he thinks the company will soon enter the online insurance and mortgage business. On the other hand,

Vail Resorts

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, 3.83% of his portfolio, lost 59% of its value because of poor snow conditions in Colorado this winter. (Perhaps all those potential skiers were home daytrading.)

Elizabeth Bramwell said she likes companies that make effective use of the Internet. But when I asked her if she ever ordered a book from

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, she said no.

The buzz at the conference seemed to be that small-caps were coming back. Gabelli Westwood's Byrne owned


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when it was a small-cap and sold it when it grew into a large-cap because she believes in protecting capital. "If the S&P is up 38%, and my funds are up 20%, is that failure?" she asked. She also lamented that no one cares about risk protection when there are new millionaires being made every day.

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Acorn fund's Ralph Wanger said small-cap stocks are not dead, and that there will be a "smallification" of the market.

-- Andrew Stern

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