By Peter Carbonara

(MONEY Magazine) – Call Garrett Van Wagoner's style anything you want. It's aggressive, high-risk, terrifying, reckless--anything but boring. As Patrick Miller, a UCLA administrator who has had money in Van Wagoner's funds since they were launched in 1996, says, "This is a great wild ride we've been on with him."

Van Wagoner has been a celebrity fund manager of Puff Daddy proportions since the early 1990's, when he steered the Govett Smaller Companies Fund to 245% growth over three years. In 1996 he went out on his own, taking with him a taste for high-growth tech stocks and rapid-fire trading. By that summer, he had attracted about $1.2 billion from investors, and his Emerging Growth Fund was up as much as 50%. He looked pretty smart.

In 1997, though, he seemed to suffer a near-fatal attack of the stupids. Emerging Growth, heavily concentrated in a handful of stocks, plummeted by 20%, while the Russell midcap growth index rose 23%. About $700 million drained out of Van Wagoner's funds as investors fled. And the following year, 1998, was only slightly better.

But for the 12 months ended Oct. 15, four of Van Wagoner's five funds--Emerging Growth, Technology, Mid-Cap, Micro-Cap and Post-Venture--had returns of more than 200%. Once again, he's managing about $1.2 billion.

What happened?

"Did we try to reinvent ourselves?" asks Van Wagoner. "Not really." He points to two developments: lower interest rates and the Internet--"the biggest technological invention since the wheel." While he says he is more diversified than he used to be, the portfolios of his five funds were almost identical as of Sept. 30, with the top 10 holdings of each dominated by the same Internet-related names. Ariba, which makes business-to-business e-commerce software and whose stock has soared since its June IPO, was either the largest or second largest holding in four of Van Wagoner's five funds. So why have five funds? Van Wagoner says the amount of overlap is greater than normal for him, but he's happy to be riding a handful of stocks as long as they are winners: "We don't manage for style boxes."

There's no arguing with this year's performance, but the skeptical investor might wonder about betting so much on so few stocks, not to mention the constant turnover generated by Van Wagoner's trading. For the first three quarters of 1999, his Emerging Growth fund had a turnover rate of 269%. He says the risk simply comes with high-growth technology stocks: "We're not going to go outside that umbrella to try to dampen the volatility."

But if he really thinks the Net is the greatest invention since the wheel, why doesn't he hold on to some of these companies? Van Wagoner says investing in new companies whose valuations may fluctuate wildly is a lot different than investing in stable large-caps. Regardless of how good he may feel about a company, he says, he owes it to his shareholders to trim or eliminate a position if the market disagrees.

Over the past 12 months, Van Wagoner's instincts as a trader have served him well. He says the fundamentals for his kind of stocks remain strong, but steep valuations along with jumpiness about possible interest-rate hikes caused him to move about 10% of his assets into cash. He dumped or trimmed a number of his Internet holdings last April just before many of them tanked. Van Wagoner decided to bail when he saw a lot of buying from big mutual funds and institutions. "That's almost always the top of a market," he says.

And now, Van Wagoner is once again a darling of the financial press, not to mention trade-show audiences. Patrick Miller, though, who stuck with the manager during the darkest days of 1997, says he's had enough. "Don't get me wrong," says Miller, "I'm very happy with the gains"--about 100% on his original investment of $10,000 in 1996. Nonetheless, Miller says he plans to take his money out of Van Wagoner's funds gradually and put it into individual stocks. If he's going to take big chances, he says, he'd rather place the bets himself.