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Torray puts simplicity, success first

Bob Torray likes to keep things simple.

He dislikes e-mail and prefers to talk face to face. His Bethesda, Md., office, unlike the document-stuffed caverns of many fund managers, resembles an upscale hotel room.

The investment strategy he employs for his $1.5 billion Torray fund is similarly uncluttered. He ignores market chatter and doesn't try to divine the future. "We don't do forecasting," he says. "We're not thinking about the market, and how we're doing relative to the market."

What he and co-manager Doug Eby do think about is success and consistency. They pick stocks of large companies that generate healthy cash flow and have a history of rising earnings, then hang on to them for an average of about four years, and as long as 10 years. "We'd much rather assume that a business that's done well for 25 years will continue to do well than bet on a turnaround," Torray says.

Torray's buy-and-hold strategy has paid off with an annualized return of 13 percent since the fund's 1990 inception. The fund (symbol TORYX; 800-443-3036) has outpaced Standard & Poor's 500-stock index by two percentage points per year. Annual expenses, at 1.08 percent, are reasonably low, but you'll have to ante up $10,000 to invest.

The fund consists of just 43 stocks, mainly of financial, industrial, media and health-care companies. Top holdings include Spanish language broadcaster Univision and such behemoths as American Express and Walt Disney.

Torray generally avoids companies in industries with a lot of buzz, but he will pounce when those firms stumble, or when their short-term outlook is bleak. That sometimes makes him a "reactionary" investor, buying when bad news causes a stock price to drop. He uses no statistical formulas — most of his ideas are based on instincts he's developed over 33 years in the money-management business.

Lately, results have been lackluster. Over the past year to July 1, the fund essentially broke even, trailing the S&P 500 by six percentage points. Too many drug and media stocks hurt, as did a lack of commodity companies, which Torray says are too cyclical for his taste.

Torray fund is a good choice for investors who, like Torray himself, don't sweat the small stuff. At the mention of retirement, Torray, 68, just grins. It's not even on the table, he says. "This is not a stressful business. As long as you're wired up right and you have ideas, you can work indefinitely."