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Go-Anywhere Funds

Steve Romick hates to lose money.

Steve Romick hates to lose money. Recently, he's been making the most of the flexible mandate of FPA Crescent (FPACX) by reducing exposure to stocks and buying more bank loans. "Debt, debt, debt," he says, describing the pattern of his recent purchases.

The way Romick views the world, the economy will not recuperate and stocks cannot mount a sustainable recovery until yields on bonds other than those backed by the world's strongest nations come down and banks heal. So he'd much rather pick up senior bank debt of distressed corporations yielding 20% or more to maturity. He is also sticking with energy stocks. He figures that these companies will benefit over time, when inflation ticks up.

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Bruce Berkowitz, of Fairholme fund (FAIRX), knew it would be bad, but he never expected it would be this bad. "We predicted rain, but we didn't build a strong-enough ark," he says. As the economy cuts back on debt and consumers struggle to rebuild household balance sheets, he's leaning toward businesses that derive much of their income courtesy of Uncle Sam. That helps explain the recent dramatic increase in Fairholme's allocation to health care and defense. "What's more important than the health and safety of your family?" Berkowitz quips.

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He is also snapping up high-yielding bonds from outfits such as Hertz. "If we can get equity-like returns for our shareholders and do it in a safe position, why not buy bonds?" he asks.

Investing with the inimitable Ken Heebner, of CGM Focus (CGMFX), is always a bit of a roller-coaster ride, but the past two years have been ridiculous. In 2007, CGM Focus soared a majestic 80%. Then, in 2008, the fund fell back to earth, plummeting 48%.

When Heebner is on, he is really, really good. But when he's out of sync, he can be awful. Over the long haul, though, his results are quite stunning. At last check, Focus looked pretty tame, with about 10% of its assets in dependable Abbott Laboratories and 28% in insurance stocks.

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