For John Rogers, CEO of Chicago-based Ariel Capital Management, the world took on a whole new look last March 10. In that day, the tech-heavy Nasdaq index - after an incredible run upward - finally peaked before starting a sharp decline. Investors who thought the tech revolution knew no bounds got a dose of reality.

Rogers, a diehard value manager whose personal motto is "slow and steady wins the race," was finally rewarded for his patience. "March 10th was the magic day when value investing started to come into its own," he proclaims. "People have sold the dot-coms and are looking for quality, tried-and-true businesses again."

Among fund families with at least two stock funds, tiny Ariel is the top gainer since the start of that spring sell-off. Small-cap Ariel Fund and midcap Ariel Appreciation climbed 38% and 34%, respectively, through October, while the average value fund gained just 9%. That helps blot out the memory of 1999, when the two funds lost 6% and 4%, respectively, while value funds gained 12% and growth funds were up 29%.

UNMOVABLE
Rogers pins last year's losses on big positions in marked-down newspaper, office product, and insurance stocks. Of course, a lack of tech stocks also hurt.

In 2000, the two Ariel funds benefitted from their lack of tech exposure and scored some coups, as well. For example, Central Newspapers, which Rogers started buying in 1990, traded at around $31 before the company announced last June that it was in talks to sell itself. The stock soared by more than 50%; later, publishing giant Gannett Inc. bought Central for around $64 a share.

In his quest for bargains, Rogers' recent purchases included Dial Corp., J. M. Smucker, Bausch & Lomb, and American Greetings. Notice the continued absence of tech stocks. "Even after their tremendous decline, most technology companies still sell at very high price/earnings multiples, and very high prices relative to cash flow," he says.

Adds Eric McKissack, who has run Ariel Appreciation since in opened in 1989: "We look for companies selling at a 40% or greater discount to what a rational buyer would pay for the entire business. That gives us our margin of safety." Once the managers decide to buy, they buy in bulk, plowing each fund's assets into only about three dozen stocks. "But even with their relative concentration," McKissack adds, "our portfolios tend to be less volatile than average."

COMMUNITY ASSETS
Ariel Capital Management, which runs about $4 billion for private clients, follows certain "socially responsible" investing criteria, avoiding tobacco and alcohol stocks, for example. It also supports education programs, including investment classes at a public school on Chicago's South Side. Starting in first grade, students at Ariel Community Academy learn about money management. In junior high and high school, they invest real money provided by Ariel and John Nuveen & Co.