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GOING AGAINST THE CROWD PAYS OFF

To forge against the crowd takes plenty of courage and conviction. It's hard to stand alone and go your own way when the masses are march-ing the opposite way. But if you stay the course, you'll often reap big rewards.

The contrarian approach works especially well in investing. The conventional wisdom on Wall Street is often wrong, and you can make good money if you're willing to bet your conscience and against the consensus. One of the best mutual fund practitioners of that opposite-is-good philosophy that I know is Crabbe Huson Special Fund in Portland, Ore.HANDSOME RETURNS. Over the past five years, this no-load mutual fund has produced handsome total returns of 19 percent a year compounded. Last year, it returned 11.7 percent while the S&P 500 barely finished on the plus side.

That kind of performance caught my attention and that of other investors over the past year. At the end of 1993, the equity fund totaled a puny $29 million in assets. This month, assets had surged 20-fold to $571 million.

Head contrarian is portfolio manager Jim Crabbe, who, with Dick Huson, runs a family of eight funds. In the 1970s, Crabbe discovered the strategy of buying good but battered stocks at a discount and has burnished it ever since.

BUY IF THE PRICE IS RIGHT. Here's his premise: If you buy a good stock at the right price, you'll make money. But if you buy a good company at an even lower price when no one else wants it, you'll make even more money. "If you buy a stock at a discount and you have done your homework, you take a lot of the risk out of the investment," Crabbe says.

He scours the list of stocks making new lows for buy candidates. That's right, new lows. Frequently, those stocks are reeling from bad news and negative analyst comments. When he finds a stock that has fallen at least 50 percent from its high in the past 12 months, Crabbe talks with researchers in the stock's back yard to discover the real story. If the company's management has a plausible recovery plan - and the price is right - the stock may be worth an investment.

Price is crucial in Crabbe's game plan. He won't commit to a stock unless he's confident it will rise at least 50 percent within two years. That shows he's willing to be patient and let the rest of the market discover what he already knows.

If he gets the gain quickly, he will continue to ride it up if other investors are taking notice. If the strength isn't there and the price will have to go down before it goes back up, he will book a smaller profit and get out.

SIMPLE SELLING STRATEGY. His selling strategy is simple. If the story doesn't develop as planned, he will sell. He rarely hangs on past a 15 percent loss on an individual stock.

Even though he's committed to going against the grain, Crabbe admits that his stomach still churns every time he invests in an unloved stock. It's contrary to human nature to go against the crowd.

Crabbe Huson Special's portfolio numbers a manageable 45 stocks, mostly mid-size issues of $300 million to $1 billion in market capitalization. The fund will put money into bigger stocks -such as a successful venture in Apple Computer - if the price is cheap enough.