Manager tenure: 15 years
Fund type: Small-cap blend
Expenses: 1.26%
His picksBrunswick: "Boat sales have plummeted to a new trough" says Rick Whiting, a co-manager of FMI Focus, "but Brunswick closed some plants, allowing the company to remain profitable. Further, their bowling and sports equipment business adds nicely to earnings."
VeriFone Systems: "VeriFone is one of a duopoly making point-of-sale terminals for credit cards," says Farzam. "There are 10 million in the U.S., and many of them need upgrading to comply with security standards and allow for mobile payments."
MedAssets: "MedAssets makes software that helps hospitals reduce spending and increase insurance revenues," says Garcia. "It's a subscription service, so it has high recurring revenues. We think earnings can grow 20% over three years."
Secret of success "Our philosophy is simple," says Lane. He and his co-managers -- Faraz Farzam, Aaron Garcia, and Rick Whiting, who all joined him two years ago -- look for businesses with stock market valuations of less than $2 billion that are selling at a discount to what they think it would cost to buy the company outright.
That laser focus has helped the fund lead in downturns and upswings. In early 2008, for example, the managers had trouble finding bargains and began trimming picks that had reached price targets. "By the time Lehman hit in fall of '08, we'd accumulated a pretty good cash position," Lane recalls. "Then, by the spring of '09, the market was a smorgasbord of opportunities."
Where he sees opportunity Lane says that they aren't betting on sectors but zeroing in on individual values. "There are many reasons why you can buy a good business cheap," he says. For example, investors' distaste for firms making luxury goods helped quash the price on boat manufacturer Brunswick, and VeriFone and MedAssets have suffered stock dips because of acquisitions; the Focus team thinks both will ultimately pay off.
NEXT: Kim Scott
