Also during that time, Marty Whitman, manager of the Third Avenue Value Fund, purchased bonds of K-Mart both before and after it filed for bankruptcy protection in 2002. He only paid about 20 cents on the dollar for the bonds. Even though, for a while, it looked like the company would shut its doors for good, Whitman was vindicated when the K-Mart emerged from bankruptcy and his bonds were exchanged for stock in the new company.The same post also takes a look at Buffett's initial investment in The Washington Post, which he bought during the bear market of '73-'74.
Shares jumped much higher in the years following the reorganization, and then were taken over by Sears Holding (nasdaq: SHLD - news - people ), which produced a nice profit for Whitman. Thanks to moves like this, the Third Avenue Value Fund has earned a market-beating 14.3% return since Whitman founded the fund in 1990.
While the article is focused on contrarian investing--a style that we think has serious limitations (in that the main focus is on what others think as opposed to the true value for a stock and its price), it is well worth reading. Head to Forbes and see for yourself.