The World's Greatest Investors

THESE DAYS IT'S HARD TO have a conversation with a top money manager without a reference to the great sloshing sound. The liquidity, they mean, that's fueling a record number of buyouts and helping send the market to new highs. While all of our experts weighed in on the uniqueness of today's market, there were myriad takes on what it all means. In our third annual installment of The World's Greatest Investors, you'll hear very different reports on how some of the greatest investment minds plan to make a splash in this record-breaking market.

WARREN BUFFETT
It's hard to pity the high-class woes of the country's second-richest man. But being the perennial world's greatest investor doesn't mean life is easy for Warren Buffett. He can invest a billion here and there, and it still may not have much impact on Berkshire Hathaway's massive portfolio of companies and securities. "If I had less money, it would be easy to make money right now," Buffett said wistfully at his annual meeting earlier this year.

"Years ago I had too many ideas and too little cash," he adds. Buffett, 76. "Now I have too much money and few ideas." Which is not to say he doesn't have any of the latter. He recently took a stake in health insurer WellPoint and added to his positions in Johnson & Johnson and Sanofi-Aventis. And he put more than $4 billion to work in railroads: Burlington Northern Santa Fe, Norfolk Southern and Union Pacific.

Buffett's Picks

 WellPoint (WLP)
 Burlington Northern Santa Fe (BNI)
 Sanofi-Aventis (SNY)

BRIAN ROGERS
One of the first things you learn about Brian Rogers is that he doesn't take himself too seriously. How could he when he keeps a red plastic fire hydrant in his office? On being named chairman of T. Rowe Price in December, Rogers, 52, received this offbeat gift from two former colleagues, along with a note that read, "A T. Rowe Price chairman is to the investment staff as a fire hydrant is to a pack of dogs." That joke notwithstanding, Rogers, who is also the firm's chief investment officer, commands unusual respect within his ranks, which include 134 analysts and portfolio managers who oversee $350 billion in assets. One reason: He's still one of them. As the manager of the $26 billion Equity Income fund, Rogers has delivered an annual return of 10.1% over the past 10 years, versus 7.8% for the S&P 500.

Rogers is sanguine about the prospect for stocks right now. "I have a tough time believing the market is undervalued at 16 times earnings," he says, "but stocks aren't overpriced either."

Rogers's Picks

 3M (MMM)
 General Electric (GE)
 Pfizer (PFE)

SUSAN BYRNE
For more on the investment ideas of these five great investors, turn to the August issue of SmartMoney.
 
Susan Byrne never had much choice about achieving. Her father went bankrupt, so her mother went to work and supported six children. "It not only left an impression on me but gave me the confidence that I, too, could do anything I wanted," says Byrne, founder of Westwood Holding Group. "Doing anything" translated into being one of the most insightful market watchers, one whose talent for buying undervalued stocks has paid off handsomely in the long term. Over the past 15 years, her Westwood Equity AAA fund has produced an average annual return of 13.6%, compared with a 10.7% return for the S&P 500. Lately her portfolio's gains have been driven by her big-picture calls on globalization.

Byrne's Picks

 ADP (ADP)
 Accenture (ACN)
 American Express (AXP)

DAVID HERRO
David Herro became the bad boy of British tabloids when he led a shareholder revolt and booted the flagrantly spending Maurice Saatchi of Saatchi & Saatchi off its board in 1994. It has worked to his advantage ever since — years later people still worry about his sharp elbows whenever the manager of the Oakmark International fund amasses a large position.

But they aren't that sharp. Herro, 46, is not a slick, cutthroat product of Wall Street culture, but a fresh-faced, mild-mannered son of Wisconsin's rural Fond du Lac. Activism, in his view, "is a very last resort." Nor has he needed it much. Herro's $9.2 billion Oakmark International I has a 10-year annualized record of 12.0%, beating the MSCI index of developed non-U.S. markets by 3.8 percentage points.

Herro's Picks

 HSBC (HBC)
 Diageo (DEO)
 Novartis (NVS)

RON BARON
When you see Ron Baron in a photo, he's usually the one with the ear-to-ear grin. Do growth managers have more fun? "It's possible," says Baron, 64, who has $300 million of his own money invested in his $21 billion Baron Funds. He buys companies with outlooks so sunny he figures their stocks can double in five years. He also tends to invest in the companies whose CEOs he likes. Leaning back in a rocking chair that once belonged to JFK, Baron gestures to million-dollar art works by Roy Lichtenstein and Alexander Calder in his airy, sun-filled office: "How couldn't I be happy?" It's a far cry from his Asbury Park, N.J., upbringing in an apartment so tiny the refrigerator was kept on the porch.

He makes investors smile too. His flagship $6 billion Baron Growth has produced an average annual return of 13.8% over the past 10 years, compared with the S&P 500's 7.8%. And he's still bullish.

Baron's Picks

 Wynn Resorts (WYNN)
 Whole Foods Market (WFMI)
 ITC Holdings (ITC)