Fund managers Dennis Delafield and Vincent Sellecchia waited 20 years before buying Leggett & Platt shares, demonstrating the kind of...

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Fund managers Dennis Delafield and Vincent Sellecchia waited 20 years before buying Leggett & Platt shares, demonstrating the kind of bargain-seeking patience that helped them beat 90 percent of rivals in the past decade.

Their insistence on buying stocks they consider inexpensive and poised for a turnaround has led their $650 million Delafield Fund to an 11 percent average annualized gain in the past 10 years, ahead of the 7 percent annualized increase in the Standard & Poor’s 500 index.

This year, through June 18, the fund edged up 0.1 percent, better than 87 percent of similar funds, according Morningstar in Chicago.

Delafield and Sellecchia started buying shares of Leggett & Platt, a maker of lumbar supports and box springs for mattresses, in December.

After two decades of meeting with officials, the managers were convinced that divestitures and plant closings would reverse a three-year, 31 percent decline in its stock price.

They also bought more shares of Spartech, a maker of plastic sheeting and molded products, in March after a 64 percent drop in 12 months.

“They are bottom-up stock pickers, and they try to buy in at low prices,” Michael Breen, a fund analyst with Morningstar, said in an interview. “They’ve made a big bet on industrial companies over the past decade and gotten some huge returns.”

The New York-based Delafield Fund has a Sharpe ratio of 0.77, compared with the 0.41 Sharpe ratio for competitors, according to Morningstar. A higher Sharpe ratio means better risk-adjusted returns. The fund has Morningstar’s second-highest rating of four stars.

Delafield Fund devotes a third of its assets to industrial, chemical and manufacturing companies. Industrial stocks have a high level of management changes, divestitures and mergers, ideal for the managers’ preference for companies undergoing transformation, Sellecchia said.

“To the extent we can identify change before it happens and it’s positive change,” he said, “we should have a good investment on our hands.”

Delafield Fund has 19 percent of assets in consumer and retail stocks and 12 percent in technology stocks. It has less than 2 percent each in energy and financial stocks.

Morningstar classifies Delafield as a midcap value fund. The managers have 45 percent of assets in companies with market values from $300 million to $2 billion, and 31 percent in those worth $2 billion to $10 billion.

Delafield and Sellecchia invested in Carthage, Mo.-based Leggett & Platt after the company announced plans to sell units, close plants and increase its dividend. The shares, which fell 26 percent in 2007, had been in positive territory much of this year before the recent market slump.