David Basten relishes being nimble.
The Yorktown Classic Value Fund, which he manages, has only $15 million in assets, and last week that small size came in handy.
As stocks sagged, "we were able to quickly move 10 percent of the assets" into favorite stocks that were under price pressure: Phelps Dodge, Owens Corning, Federal National Mortgage, and Chase Manhattan.
"Because we are small, we are able to do things that a large fund would find more difficult," Mr. Basten says. "We look at a downturn as a buying opportunity. If a stock that we find exceptional is dropping in share price, we will continue buying it as it goes down."
The approach seems to work. Yorktown (800-544-6060) jumped 31 percent this year through August. Fidelity's $63 billion Magellan fund was up 20 percent, and the stock market, measured by the Standard and Poor's 500 index, rose just over 21 percent.
Yorktown generally owns about 30 stocks, and seeks underpriced companies.
Basten says he's not worried about a market plunge. "The best opportunities come in the worst moments," he says, and the market eventually bounces back.