But not before he learned about how to value a company from the inside out, which was one reason Gipson invited him to join his fledgling firm in 1984. Gipson, a former U.S. Navy officer, had worked as a management consultant at McKinsey & Co. and as a portfolio manager for Batterymarch Financial before founding his firm. Gipson and Sandler have co-managed Clipper Fund since its inception in 1984. Veaco, a certified public accountant who once worked with Price Waterhouse, joined the team in 1986. Quinn joined Pacific Financial Research in 1987, after getting his MBA.

Few Bargains Around

With technology stocks so battered, some value fund managers are starting to edge into that territory, even if they haven't set foot there in years. Not Sandler and the Clipper team, whose fund last owned a technology stock six years ago.

"Yes, tech stocks have landed with a thump," he says. "But they are down from valuations that were off the charts. These aren't necessarily bad businesses, but their stocks just aren't cheap enough."

In fact, says Sandler, there isn't much out there that fits Clipper's bargain-basement-buy criteria. Last year about this time, Clipper's managers were loading up on Philip Morris, Freddie Mac and other stocks that looked cheap. That brought the fund's cash position down to 22%-high by most mutual fund standards, but fairly narrow for this fund, which always keeps an ample cash cushion on hand.

Now standing at 34% of assets, that cushion has turned into a couch. Late last year, Clipper's managers began paring some stocks that had had a good runup, including Tenet Healthcare, Allstate and Nike. By then, the world had discovered the virtues of value stocks, making them pricier than Sandler was willing to pay. So he put some of the money from those stock sales into cash.

"When a stock becomes fully valued, we're not afraid to sell it. And when we can't find anything we want to buy, we're not afraid to let our cash position rise. And really, there is not much out there we find attractive right now. The largest losses have taken place in the stocks that were most unreasonably priced. That's made them cheaper than before, but not cheap enough to buy."

Sandler insists that the fund's propensity for taking big cash positions is not the same as timing the market. "Timing the market is when someone tries to predict short-term market swings, which isn't our goal here. The fact that there's a high cash position in Clipper just means we can't find companies that fit our valuation parameters."

Moving into cash, however, isn't an option in Clipper's sister fund, the $250 million UAM Clipper Focus. While both funds have the same investment philosophy and approach and generally own the same stocks, UAM Clipper Focus keeps all but about 5% of its money in equities at all times. The managers compensate for the lack of cash by holding proportionally larger asset weightings in each name.

Launched in 1998, UAM Clipper Focus is the more aggressive and volatile of the two funds, says Sandler, because it doesn't have a fixed-income component to help smooth out the stock market bumps. Still, in terms of a risk-reward profile, this is more a spicy Clipper than a Clipper on steroids. When the stocks in the two funds are doing well, UAM Clipper Focus will rise a bit more than Clipper, but it will drop more noticeably in bear markets.