By Frank Byrt, TheStreet

 

Investors looking for direction in the stock market from star fund managers of the past decade, such as Bill Miller, Ken Heebner and Bruce Berkowitz, have realized they're sometimes as confused as the rest of us are.

 

Unprecedented events such as the near-default of U.S. government bonds, a painful European debt crisis that seems to have no end and natural disasters abroad and at home have come to a head, pummeling almost everyone's portfolio, save for the extraordinary. Those include Warren Buffett (a sweetheart deal brokered with Bank of America (BAC) last week that will give him $300 million a year in special dividends), Carl Icahn (a reported $2 billion windfall by betting against U.S. stocks this month) and John Thaler (his JAT Capital Management hedge fund is among the best performers in the world this year, up more than 30%).

 

The benchmark S&P 500 Index ($INX) of U.S. stocks has fallen 6.6% this year, sending mutual fund investors for the exits -- or at least to the relative safety of bond funds as they see returns suffer on once high-flying funds. But there are stock-fund managers building reputations as they assemble wealth for clients. They may not be stars, but they soon may be if their hot hands continue.

 

Take, for example, the $4.4 billion Sequoia Fund (SEQUX). It has been managed by Robert Goldfarb since 1998. The guy's a genuine all-star. The Sequoia Fund has returned an annualized average of 9.1% over the past 15 years.

 

The Sequoia Fund is up 2.5% this year, ranks in the top 1% in its fund category and has a total annual return over the past three years of just under 4%. It's holding 21% cash now, but that's probably a smart move.

 

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The fund's biggest stock holding is Valeant Pharmaceuticals (VRX), which has rocketed 47% this year.

 

Another all-star is the Forester Value Fund (FVALX), with only $168 million in assets. It has been managed by Thomas Forester since 1999. It's little changed this year, but so what? Over the past 10 years, the Forester Value Fund has recorded average annual gains of 5.1%.

 

This fund, too, went to cash at seemingly the right time. It held 20% at the end of June. The portfolio is loaded with a lot of so-called high-quality companies, including oil giant Chevron (CVX) and cigarette maker Altria (MO). The companies' shares have risen about 8% on the year.

 

Ryan Leggio, an analyst for fund tracker Morningstar, cites Donald Yacktman as a great long-distance runner when it comes to investing. His Yacktman Fund (YACKX) is close to fully invested and is up slightly on the year, and it's in the top 2% of funds in its category, large value funds. He's always near the top of the charts.

 

The Yacktman Focused Fund (YAFFX) is up 0.4% this year, putting it in the top 1% of funds in its category. And it has a three-year annualized average return of 14%.

 

Todd Rosenbluth, a mutual fund analyst at Standard & Poor's, cites the managers of the $2.2 billion Janus Triton Fund as being able to weather any storm. It's down 7% this year, almost half that of its small-cap category. Over the past five years, the fund has an average annual return of 9%, tough to do with volatile small-company shares.

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Brian Schaub and Chad Meade have been on board as co-managers since 2006. "They invest in higher-quality small-caps, they can be defensive on the downside and they get good returns from buying companies that have been unfairly punished," said S&P's Rosenbluth.

 

Morningstar analyst Kathyrn Young writes that the fund's record is healthy. Its 11.2% annual gain since Mead and Schaub took over in July 2006 is more than three times the category's average increase.

 

"What's more, the fund has tended to lose less than most peers in downdrafts," she says. "So, while it won't be perfect, as demonstrated by its 40% loss in 2008, it should fare better than most through any sniffles or flus the market may catch."