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Five money managers examine portfolio management strategies in the latest issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info541.htm

TWST: You had mentioned earlier that you have somewhat of a contrarian approach, and certainly your mention of Lucent might be contrarian. Can you tell us why you think it is undervalued at this time?

Mr. Croft: It’s amazing how quickly you can go from buying momentum to buying contrarian in one stock, and that is a great example. Lucent, to us, in the telecommunications equipment sector, has the best balance sheet to survive the tough times ahead. There are going to be more tough times ahead, and we think it could be over a year before spending starts increasing. But they have the balance sheet, the size and the wherewithal to survive this. And going forward, looking through the trough, they will be a beneficiary of other companies still going out of business. Lucent (NYSE:LU) definitely is a contrarian bet, but it’s a type of position that we start out with .5% and maybe increase our position later.

TWST: What would you say your main challenges are that you are grappling with at this time?

Mr. Croft: The main challenge, from a big picture standpoint, is valuation. That’s usually what it boils down to for us in the market. Right now, we don’t think the market’s overly cheap or overly expensive; we’re still finding ideas to buy and we’re still finding ideas to sell. But it’s not significantly weighted one way or the other. We do look favorably on the markets for the next couple of years, and we do think inflation’s going to stay low, keeping interest rates subdued. The economy is getting better, there is stimulus coming from the government, and there’s a lot of money on the sidelines. I think there is the highest percentage of mutual fund money in money market funds relative to the whole fund industry as there ever has been. So there’s a lot of money wanting to go somewhere that is, I am sure, not happy earning 1.6% in the money market fund. So, hopefully, money flows will help some. Companies are a little better prepared and leaner, and there’s an election year coming up, so I think the government is incented to get the economy going. That’s what looks good to us, but, obviously, the war in the Mideast creates a lot of uncertainty, which the market doesn’t like, and I think a lot of that is priced into the market. I think that’s why the market is schizophrenic right now, the underpinnings from a financial point of view, a valuation point of view, look decent, but the war out there will keep things in check. The accounting problems stemming from Enron cannot be underestimated, and I think we’ll see more and more instances of some irregularities, to be nice about it, coming up, and I think that will weigh on the market. But I do think that, in the long run, when we’ve gotten through this whole process of flushing out all these problems, the market will be much better off.

TWST: What kind of investor is attracted to your funds, and what are their concerns at this time?

Mr. Croft: Our investors are typically long-term investors, number one, who look at us for an above-average return over time with reduced risk. We’re not a speculative go-go firm. Most of our investors have been with us for a long time.

TWST: What about their concerns? How do you manage expectations?

Mr. Croft: A couple of years ago, we received some comments that we weren’t invested heavily enough in technology, and now concerns are related to when are the equity markets going to resume their growth and start appreciating again. People are still waiting, still have in the back of their minds the 15%-20% returns they were getting in most of the 1990s. We’re trying to tell people that with average returns of stocks, you should expect 10%-11% and be happy with that, especially in a low inflation environment. The other concern is just with the Internet. The advent of the Internet itself has created more short-term thinking. And this leads to more volatility amongst stocks. With the Internet, everybody has so much more information, but the problem is how you deal with that information and the power that that brings, or that perception of power that you get. So I think changing short-term thinking to longer-term thinking is still a challenge.

This special Investing Strategies Report includes:

1) Kent G. Croft, President and Director at Croft-Leominster Inc., examines portfolio management strategies in this timely and deeply informative 4,000-word interview from The Wall Street Transcript.

2) Daniel D. McClure & Keith A. McLean, both Partners with I.G. Investment Management, Ltd., examine portfolio management strategies in this timely and deeply informative 5,400-word interview from The Wall Street Transcript.

3) Norman Gee, Senior Vice President and Senior Portfolio Manager at Freemont Investment Advisers, examines portfolio management strategies in this timely and deeply informative 2,700-word interview from The Wall Street Transcript.

4) David C. Jordan, Chief Investment Officer of First Bruce H. Geller, is Executive Vice President at Dalton, Greiner, Hartman, Maher & Company, examines portfolio management strategies in this timely and deeply informative 4,200-word interview from The Wall Street Transcript.