The stock-market crash has forced value-fund managers like Marty Whitman and Bill Nygren to tweak their strategies and, in some cases, redefine "value."

Whitman, founder and co-chief investment officer of

Third Avenue Funds

, is still troubled by the rush of redemptions his firm was forced to fill last fall, often selling at a loss to meet obligations. "I got so buffaloed by the market," he said at the Morningstar Investment Conference in Chicago last week. "It was so discouraging to be hammered day after day."

The sell-off had nothing to do with the underlying health of value stocks, he said. "Prices were driven by short sellers and day traders, market participants who focus on short-term earnings," Whitman said. "It's ludicrous to think those participants have any message for those who invest for value."

Now that the panic has mostly subsided and stocks have risen in the past three months, major value-fund managers are sticking to their proven strategy: starting with a company's fundamentals, rather than taking a top-down, macroeconomic approach based on larger market forces.

"We haven't altered our approach overall," said Meggan Walsh, senior portfolio manager at

Invesco Aim

. "We're bottoms-up fundamentalists."

As for the importance of overall market forecasting, she noted, "even the best economists on Wall Street are only right 50% of the time."

For Nygren, manager of the

Oakmark Fund

(OAKMX) - Get Report

and the

Oakmark Select Fund

(OAKLX) - Get Report


Harris Associates

, three conditions must be met for his funds to buy a common stock. First, the company must have very strong financials. Next, the stock must be available at an attractive price. Finally, a company must show it can increase its net asset value by double digits in the next five years. To meet that growth criteria, half the funds' equity holdings are with companies that have a large presence in China.

Nygren has bought


(EBAY) - Get Report



(AAPL) - Get Report

. "Apple has the best, most well-run stores in the business," he said.

Among stocks that managers cited as good value buys were medical-technology firm


(MDT) - Get Report

, drugstore chain



and health-care company

Johnson & Johnson

(JNJ) - Get Report

. "J&J is selling at 9 to 10 times earnings," Walsh said. "It's a once-in-a-decade opportunity to upgrade your portfolio."

Fund managers, learning a lesson, are taking a closer look at how companies might weather future recessions and crises. "Cheap is no longer a sufficient reason to invest," Whitman said. "You have to look at a company's credit-worthiness."

"Don't underestimate the importance of liquidity in a crisis," Walsh advised. "Make sure a company has the ability to get funding."

Nygren favors companies that have a stockpile of cash on hand. "The balance sheet is just as important as the price-to-earnings ratio," he said. "A big piece of a company's value is excess cash, and if you're looking strictly at P/E, you're missing that."

Value investors are buying up stock at sale-level prices. "The times value can have the most value is when everyone else is wondering if we'll ever get back to normal," Nygren said.

Elizabeth Blackwell is a freelance writer based in Chicago. She is the author of Frommer's Chicago guidebook, and writes for the Wall Street Journal, Chicago, and other national magazines.