A Buffett Disciple Hangs Tough

The manager of this small-cap value fund crushes his rivals.

How bad was the U.S. stock market over the past year? The best performers among diversified U.S. stock funds were those that specialize in small, undervalued companies -- and that group still lost an average of 29%. Royce Special Equity (symbol RYSEX), one of the category's stars, lost just half as much.

Charlie Dreifus, manager of Special Equity since its 1998 inception, says his stock-picking approach is an amalgam of the teachings of three legendary financial figures. In a nod to Benjamin Graham, considered the father of security analysis, Dreifus buys stocks only when they're dirt-cheap. Like Warren Buffett, he looks for companies with a sustainable competitive advantage. And following the tenets of Abraham Briloff, his accounting professor at City College of New York, Dreifus brings, as he says, a cynical eye to "trying to gauge the veracity of financial statements."

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.