Intrepid Capital Management

George Soros has made some great bets over the years. Backing Intrepid Capital Management, set up in July, 1998, to specialize in tech stocks, was one of them. The fund, run by two unassuming fund managers, Steve Shapiro, 39, and Mike Au, 32, had no trouble beating the Nasdaq in 2000. It's up 9.5% so far this year.

Shapiro began investing in technology just as the bull market in the stocks took off in 1991 when he ran Fidelity's Select Electronics fund in Boston. He later joined Tiger Management before heading out on his own with $25 million from Soros. Au, who joined in March, is an alum of two other big funds, Maverick Capital and Moore Capital Management.

The aim, says Shapiro, is to generate superior returns while minimizing volatility. That means avoiding both the heavy-leverage and tech fads, such as Internet mania. "We're more conservative than many tech funds," says Au.

Indeed, the fund was an early skeptic of Net stocks, which it shorts. "We got killed for a while," says Shapiro. "But we stuck to our convictions. We focused on shorting second- and third-tier players where we didn't think there would be as much risk." Early picks included Ventro, Garden.com, and Bid.com, all currently trading around $1. The fund remains well-hedged, but Shapiro and Au won't say what they're shorting now nor how big their short position is.

When they're buying, the two look for companies that are down on their luck but still have great technologies. Currently, they own Legato Systems Inc., a maker of storage software, which has doubled in value so far this year. Back in April, Shapiro and Au made a big bet on PeopleSoft Inc., a former highflier hit by the Y2K slowdown, buying at $14. The stock now trades at $37.

Macro investing may be making a comeback. But for Soros, his Intrepid bet never went out of style.

By Debra Sparks

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