New Crop of Picks From Respected Money Managers.

ONCE a year, I devote a column to stock ideas stolen from other money managers.

Last year I brought you some of the favorite stocks of Scott Black, David Dreman, Randall Eley, Al Frank, Charles Royce and Ralph Wanger. I'll do the same this year, and add one more, Ken Heebner.

These men are seven of my favorite investment managers, and many of them are personal friends. For the most part, I took the stocks mentioned in this column from public documents. So the managers could conceivably have changed their minds.

How did last year's crop of stolen ideas do? From Oct. 5, 2000 through Oct. 16, 2001, the six stocks I recommended - Conoco Inc., Goodyear Tire & Rubber Co., Kulicke & Soffa Inc., Philip Morris Cos., Siliconix Inc. and Simpson Manufacturing Co. - were up an average of 9.4 percent. Over the same period, the Standard & Poor's 500 Index declined 22.6 percent. All the figures include dividends.

And now for a new crop of stolen ideas.

Let's begin with Black, president of Delphi Management Inc. in Boston. As usual, I like many of his picks. One that looks especially good is Warren Bancorp Inc.

Tiny bank

This tiny bank had no non-performing loans on its books at the end of last year. It sells for 10 times earnings and 1.7 times book value (corporate net worth), and offers a dividend yield of 4.9 percent.

The market value of Warren Bancorp is only about $68 million, so don't chase the stock if publicity pushes it much above the recent price of $9.25. Be aware that getting out of such a small stock on short notice can be difficult.

Dreman is chairman of Dreman Value Management LLC in Jersey City, N.J. I am a managing director of his firm and consider him my mentor in the securities business. One of Dreman's holdings that I like is Conoco, a Houston-based oil company that explores for and produces oil and gas worldwide. It gets the majority of its revenue in the U.S., which Dreman views as an advantage.

Conoco sells for only 7.5 times the past four quarters' earnings, and 0.5 times revenue. Analysts think it will show earnings growth of about 9 percent a year for the next five years. Yet in the past five years it showed 21 percent earnings growth and 14 percent sales growth.

Eley is president of Edgar Lomax Co. and runs a tiny mutual fund called the Edgar Lomax Value Fund. One of his larger holdings is Caterpillar Inc. Based in Peoria, Ill. Caterpillar makes construction, farm, mining and forestry machinery.

The company both intrigues and scares me. It has debt equal to 275 percent of equity, way more than I normally countenance. At 18 times recent earnings, the stock at first blush doesn't seem especially cheap.

However, the past four quarters' earnings were only $2.60. Caterpillar has earned more than that in each of the past eight years. In 1997 and 1998 it earned well over $4 a share.

Frank, from Laguna Beach, is the founder of Al Frank Asset Management, manager of the Al Frank Fund, and editor of the Prudent Speculator newsletter. One of his holdings that I like (and own) is Vishay Intertechnology Inc.

Electronic components

Based in Malvern, Penn., Vishay makes a variety of electronic components for computers, cars, telephones, radios, televisions and other applications. The stock has fallen from $56 at the end of April 2000 to $21.39. At today's price it fetches only 7 times trailing earnings.

Heebner is general partner of Capital Growth Management in Boston and the manager of several mutual funds. One of his biggest positions, which I also own for some clients, is Inco Ltd.

Based in Toronto, Inco is the world's largest miner of nickel, and also digs for other metals such as copper and cobalt. Inco's total market value, $2.6 billion, is less than the company paid in 1995 and 1996 for mining rights in the Voisey Bay area of Newfoundland and Labrador.

Royce runs the Royce Pennsylvania Mutual Fund and is head of Royce & Associates Inc. in New York. One is his many bargain-priced holdings is Denbury Resources Inc., a small oil and gas company based in Piano, Texas.

Denbury at $8.05 a share sells for 4 times earnings and 1.4 times book value. Those are my kind of multiples, and I also like the fact that insiders have tended to be buyers of their own stock.

Finally comes Wanger, the only one of the seven that I consider clearly a growth investor rather than a value investor. (Heebner is eclectic.)

Wanger manages Liberty Acorn Fund, a $4 billion mutual fund with headquarters in Boston. One of his holdings that appeals to me as a speculation is Anchor Gaming of Las Vegas. Anchor makes equipment for casinos. It also operates casinos in Colorado and runs a racetrack and casino in New Mexico.

I consider Anchor stock extremely speculative because the company has a negative net worth. However, earnings in the quarter ended June 30 were the company's best ever, at $1.24 a share.

For the fiscal year that ends in June 2002 analysts expect Anchor to earn $4.91 a share. If they're right, the stock at $49.75 is selling for only 10 times earnings for the fiscal year in progress.

John Dorfman is a columnist with Bloomberg News.

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