Here’s an investing mind-set to adopt: think like a corporate acquirer. In other words, even if you’re only picking up a few shares, pretend you’re buying the entire company. Such discipline forces you to contemplate important fundamental and conceptual items before pulling the trigger on a trade.

One pro to emulate with this type of investment strategy is Warren E. Buffett, chairman of Berkshire Hathaway. In the company’s 2004 annual report, Buffett lists his acquisition criteria–among them, $75 million or more in pretax profits, consistent earnings power, good return on equity with a light debt load, management in place and “simple” (not too technological) businesses.

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Since the early 1980s we’ve marked the end of the calendar year by asking each of a group of investment pros to name the one stock they think most likely to either outpace or trail the market over the coming 12 months. Our panel of seers now numbers 17, with 12 bulls, 5 bears.

Both sets performed admirably in the year gone by. Long bets from the Love Only One class of 2005 rose an average 16% over the course of the contest versus 7% for the S&P 500. The shorts ended a three-year streak of poor showings. Their picks declined 25% on average. In all, 12 of our 17 contestants earned our customary reward for beating the market, an invitation to return for 2006. Eleven have accepted.

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One investing tenet says you should choose an investing style–value, growth and so on–and stay as faithful as possible to it. Marc Heilweil has had success taking a more flexible approach. Since its launch in 2000, his relatively small ($20 million in assets) fund, Marathon Value Portfolio, has averaged an annual 9% total return, versus 2% for the S&P 500.

“Our fund is hard to categorize,” says Heilweil, 59. “I will go where the best values are, whether it’s small-cap, large-cap, value, growth, international or domestic.” His top ten holdings illustrate the point; alongside value plays like Kimberly-Clark, you’ll find jazzier outfits like Maxim Integrated Products, a developer and manufacturer of analog semiconductors.

Still, Heilweil, a Yale Law School graduate and 28-year veteran of the investment business, keeps a few stock-picking ground rules. First, he’s a believer in Benjamin Graham’s concept of “margin of safety,” which suggests that you can cover your tail in the market by buying companies whose enterprise value (market capitalization less net debt) stands below their “intrinsic” value.

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Last spring, we published our second annual rankings of Wall Street’s best brokerage analysts. Using data from our partners at StarMine, we named the ten analysts with the best track records in the prior calendar year in each of two areas: accuracy in earnings forecasts and quality of buy, hold and sell recommendations.

As part of our year-end Investment Guide, we checked in with a few honorees in both categories to get their big-picture thinking for 2006 and the stocks they deem attractive now. The ten individuals listed in the accompanying table hail from a diverse group of employers, ranging from financial powerhouses, like Citigroup and Bank of America, to smaller outfits, such as Ferris, Baker Watts.

Overall, the mood is bullish, although there are certainly pockets of caution. Matthew Snowling of Friedman, Billings, Ramsey, for example, says he’s wary of the prospects of big money managers in his investment-services coverage area, preferring instead online brokers, like E*Trade Financial. Ivy Zelman, who tracks home builders and makers of household durables for Credit Suisse First Boston, thinks a diversified company like Fortune Brands will be a best bet in a tough housing market.

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Washington, D.C. – Fifteen years ago, Jeffrey Leonard and a partner pulled together $5 million to found a private equity outfit, the Global Environment Fund, devoted to making money off environmentally friendly technologies. “We thought we were going to invest in replacing the internal combustion engine or the incandescent lightbulb,” Leonard says.

At an investment conference here last month, Leonard showed just how far his thinking has evolved since 1990. To an audience of venture capitalists, company executives and government officials, the Global Environment Fund chief rattled off a few of his favorite deal-making areas: liquefied natural gas, clean diesel, nuclear power and clean coal. Hardly stuff to enthuse the average enviro.

Leonard says his remarks came with a measure of tongue-in-cheek but also a serious message on making venture bets in the “clean technology” category. “In this climate,” he warns, “you want to be damn careful about what kind of technology you’re going to invest in.”

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WASHINGTON, D.C. – What kind of bang does management deliver for the buck? One way for stock buyers to answer that question is to look at return on equity, or net income divided by shareholder’s equity. The number, expressed as a percentage, can indicate how well management delivers profit given the capital entrusted to them.

Return on equity has its flaws, namely that it sometimes gets a misleading boost from accounting matters rather than management prowess. For example, one-time events, such as the sale of assets, can puff up the net income in ROE’s numerator. Likewise, negative earnings, changes in accounting principles, share buybacks or restructuring charges may distort a company’s net worth.

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