Value Fund

Supersize me. Individual investors, institutions and pension funds love to own giant stocks that command everyone's attention. Market capitalization is computed by taking the total number of shares and multiplying by the share price. The stocks with the largest capitalization earned their popularity because their companies were quicker, shrewder and more forceful than the competition. Investors in these stocks expect the winning ways to continue, providing a foundation for their portfolios.

About nine years ago, I invested $20,000 in Merrill Lynch Large Cap Value Fund Class B shares (ticker symbol: MBLVX). Not too long ago, I checked out my monthly statement and noticed they switched to Class A shares. They did this without telling me. When I asked why it was done, my broker gave me an unsatisfactory explanation. Why did this happen? - H.N., Chicago You've probably witnessed a conversion: a time-release changeover from Class B shares to Class A shares. There is nothing sinister about this change.

THERE IS money to be made if Omnicare Inc. succeeds in its drawn-out takeover raid of Baltimore's NeighborCare Inc. NeighborCare stock closed Friday at $28.05. Omnicare is offering $30. That's a potential 7 percent return, putting the deal near the top of Bloomberg's list of theoretical "arbitrage" profits from pending mergers. Or more than 7 percent if Omnicare sweetens the package. But will the deal ever get done? "That's a good question, isn't it?" says Frank G. Morgan, who follows the stock of both companies for Jefferies & Co. He doesn't know the answer.

WHENEVER A mutual fund company makes an announcement designed to build the public's excitement and interest, investors should start looking for the answer to one simple question: "What's the big deal?" Generally, there is barely a small deal. As long-term investment vehicles, funds don't generate much must-know-it-today news, which is why shareholders need to be able to discern the difference between real news and lame self-promotion. To see the latter, look no further than a news release issued recently by the Preferred International Value Fund.

WHEN LAST we checked in with Sen. Barbara A. Mikulski (Aug. 10, 2003, column), she had made some amazing, uncannily awful investing decisions. Maryland's Democratic junior senator piled into technology stocks within two weeks of the peak of the tech boom in March 2000, losing thousands of dollars in the long, slow, painful bust that followed, federal filings show. Then she chickened out and sold multiple, fairly large stock positions in October 2002. That was within five days of the stock market's lowest point in the last seven years and the start of a brave, 40 percent rally.

Leave it to the financial community to put a price tag on Christmas. PNC Advisors Christmas Price Index calculated the price of 12 drummers drumming on down to a partridge in a pear tree. It had grown to more than $65,000 this year - as much as a luxury SUV. If you're looking for an alternative to dancers and pipers, consider some of these classic mutual funds: 1. and 2. Balanced funds can play a role in many investors' portfolios. Whether it's funding a college UTMA account or providing that first investment experience, balanced funds offer instant diversification all tied up with a bow. Two of my favorite balanced funds are Dodge & Cox Balanced (DODBX)

INVESTORS always hunger for one crucial bit of information: What's next? It could be the "next big thing" that is going to take off and shoot a stock to the moon, or the next hot sector worth investing in or, on the downside, the next company likely to be caught in a corporate scandal or whose industry is about to get tight. Forecasting what's next, particularly when it comes to bad news, is tricky. But if you review mutual funds right now and want to find a danger spot, large-cap value funds have an ominous shadow about them these days.

Just like the Standard & Poor's 500 - and the Dow Jones industrial average and the Nasdaq composite - Bill Miller's Legg Mason Value Trust lost money for the third straight year in 2002. But just like the previous 11 years, the return on the fund that Miller manages from the Legg Mason tower in Baltimore beat the return on the S&P 500. Miller's fund was down nearly 19 percent for the year; the S&P 500 was off more than 23 percent. "In a difficult environment, he's done well on a relative basis," said Edwin Boyer, principal at Asset Strategy Consultants, a Baltimore-based consulting firm that ranks the performance of money managers for pension plans, endowments and foundations.

T. Rowe Price Associates Inc. will close its Small-Cap Value Fund to investors at the close of business today, a move aimed at keeping the fund from becoming too large to manage. The Baltimore-based mutual fund company said the fund would continue accepting additional investments from existing investors, as well as direct rollovers from qualified retirement plans into new IRA accounts offered by Price. Companies typically close their mutual funds to keep them from being unwieldy, since it is more difficult to beat the market averages with funds that are too large.

At Enron Corp., the jackpots came easily and quickly: Since 1998, company executives and directors sold stock worth $1 billion. In hindsight, the enormous sales of Enron stock by Chief Executive Officer Kenneth L. Lay and other insiders should have raised a red flag, brightly painted with the word "sell," for investors wondering about the company's future. If only it were so easy. But while insider transactions rarely shout "buy" or "sell," they do often hint at a company's prospects.