Get 'Em Before They're Hot!

"We like to buy things for three quarters that are worth a dollar," says Roger Glenski.

The value-conscious approach has paid off for Wachovia Special Values A Fund - up 29 percent last year, outpacing most small-cap funds.

Mr. Glenski and fellow manager Michael Tierney look for companies trading about 20 percent less than their inherent value. He likes stocks that are "slightly beaten down," Glenski says in a telephone interview from his office in Winston-Salem, N.C.

So far this year, the fund itself is beaten down a bit - about 2 percent - but that's still better than its peers.

The fund (800-994-4414) has assets of $130 million and charges a load, or up-front fee, of 4.5 percent of assets. Minimum investment: $250.

Information-firm Morningstar stamps Wachovia with a five-star rating, largely because it keeps risks low, especially for a small-cap fund.

"Most of our companies are already at beaten-down or depressed prices when we buy them," says Glenski. That means less risk they'll bite the dust after being swept into Wachovia's portfolio.

Glenski makes his picks company by company. Two he currently likes are Cavalier (CAV), a maker of manufactured housing, and Host Marriott Services (HMS), an airport food-concession service. He bought both at about $9 per share and expects solid appreciation.

Industries Glenski favors include financial services, including insurance, and capital goods, such as machinery. And he sees some good buys in technology.

Despite a poor start, small-caps will rally, Glenski predicts, just as they did last year from May to September. Those with solid earnings, he says, should outperform many of the big blue chips with their sagging profits.

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