Torray Fund managers are self-taught investors who don't follow the crowd.

Whether the topic is investing or the state of fees in the mutual fund industry, Robert Torray and Douglas Eby, co-managers of The Torray Fund, write their own script.

The purchase of municipal bond insurer Ambac Financial Group, the only new addition to this $1.5 billion large-company stock fund during the first seven months of 2003, reflects the pair's penchant for bucking conventional wisdom. They bought the stock at the beginning of the year, just after growing concern about the deteriorating state of municipal finances and fallout from problems in the mortgage-backed securities market prompted many investors to unload it.

But Torray and Eby knew Ambac well, and had faith in its business model. They had purchased the stock for the fund back in 1994, shortly after the well-publicized financial crisis in California's Orange County, and it had recovered nicely with the economy. They think the insurer has a lot going for it this time around as well. Thanks to skilled underwriting, it has only had to pony up 0.03% of $640 billion in insured debt during its 30-year history. Its coveted AAA-rating remains a blessing for insured borrowers seeking to lower their cost of debt. Growth in foreign markets, and the perennial need for municipalities to expand services, bodes well for future growth.

"This is a highly profitable company with a business that has always appeared too good to be true," says Eby, 44. "Sure, there's some short-term headline risk. But the demand for critical funding of hospitals, bridges and roads isn't going to go away."

Nor does it appear that 66-year-old Robert Torray will, either, at least not any time soon. When asked if he plans to retire in the near future, his emphatic and unelaborated response is "no." He also has no plans to sell out to a larger firm, although he says he's received "lots of offers" to do so.

For now, Torray appears content to ride at full speed into the sunset of a career that began as a broker for Alex Brown & Sons in the early 1960s. In 1967, he joined New York's Eastman Dillon, Union Securities & Co., and eventually became a vice-president in charge of the pension fund management division. Some clients from that firm followed him when he founded Robert E. Torray & Co. in 1972. Between institutional accounts and The Torray Fund, which he started in 1990, his firm manages more than $6 billion in assets.

Torray, who once intended to go to law school but gave up on the idea because he liked investing more, views his lack of formal securities analysis training as an advantage. "I'm a self-taught investor," he says proudly. "It took me a long time to learn this business, and what I know they can't teach in schools. Most academics are misdirected and misfocused."

Eby says that despite his MBA from Indiana University, most of his securities training has come on the job as well. Before joining Torray's firm in 1992, he worked at Thomson Advisory Group for seven years as an investment manager and research analyst.

Torray's contrarian, against-the-crowd philosophy on investing applies to some of his other viewpoints as well. Over the years, he has emerged as an outspoken critic of what he considers abuses by the fund industry and widely held but misguided notions about investing. While most mutual fund shareholder reports focus on individual stocks in the portfolio and the reasons behind their purchase or sale, Torray prefers not to discuss individual fund holdings in his fund's reports. In press interviews, he often defers to Eby on questions about individual holdings.

"I think it's more important to educate people about the aspects of investing that will get them into trouble," he says. "Most individuals are clueless about how the financial services industry is structured, and how much it costs them to participate. They don't need to hear about the story behind why XYZ is a great stock."

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