(FORTUNE Magazine) – If the case against index funds ever came to trial, FPA Paramount would be Exhibit A. The fund has soundly beaten the S&P 500 over the past 15 years and hasn't suffered a losing calendar year since 1974. A critical footnote to that exhibit would be FPA's resolve over the years--unusual among fund companies--to limit new investments in Paramount and another top-performing fund, FPA Capital, at a time when their records could have generated big asset inflows. Paramount has been closed for much of the past decade, giving Sams greater flexibility in maneuvering through changing markets and helping returns.

So why is FPA Paramount suddenly flinging open its doors "indefinitely," potentially spoiling a good thing? The instinctive suspicion--not just in this case but in most stories of a well-regarded fund reopening--is that greed is at work. Though fund-industry insiders rarely talk about it in public, they whisper privately about marketing ploys and revenue opportunities--not exactly an investor's priorities. (PBHG Growth, for instance--which reopened last spring and jumped from $2 billion in assets to $6 billion--saw its performance plummet over that time, though it could be coincidence.)

With Sams, at age 59, it's easy to construct a conspiracy theory: Is he planning to retire soon, prompting FPA to try capitalizing on his name before he gives way to a lesser-known replacement? Is Sams himself looking to pad his own nest egg, perhaps with a bonus tied to the fund's asset growth?

"Absolutely not," snorts Sams, whose denial rings true once you hear his soul-baring explanation for reopening the fund. He has no intention of quitting, he says, and chose to reopen Paramount himself, without prompting from marketers. What he plans to do with the new money he's raised--$65 million so far--is not line his own pockets but rather line the fund's: He's hoarding cash within the portfolio. Worried about the future of the stock market, Sams has been selling equities, but he wanted even more cash than this would provide. Thanks to the inflows, as of late March he had 38% of the fund in cash. Chances are, if you invested in FPA Paramount since it reopened, he's still sitting on your money.

And there's more. Sams has also been buying gold stocks, which have grown to a 12% stake in the fund. The upshot is the ultimate bear market bet--a stock fund that, in effect, is 50% out of the general equity market. "I realize I'm sticking my neck out," says Sams. "I'm making a pretty strong statement. All that cash, and gold on top of that. I have never bought gold before in my career."

In some ways Sams's recent turn isn't that far out of character. His style has long been an intriguing mix of dare and care, piling big bets in a handful of names atop a cash cushion that has often run to double digits. Still, a nearly 40% cache carries its own particular risks. The worst thing that could happen to Sams in 1997 would be another year like 1995, when a soaring market left FPA Paramount far behind, weighed down by a premature foray into energy and retail stocks and a stockpile of useless cash.

If, on the other hand, Sams is right and the market moves sideways or, worse yet, tanks, he'll be in a good position, with plenty of money on hand to cushion the fall, meet shareholder redemptions, and, yes, reenter the market as a discriminating buyer just when others are fleeing in panic. "My whole philosophy," Sams explains, "has been to look at the downside first and the upside second."