MarketWatch was running a interview today with Will Nasgovitz, co-manager of the Heartland Select Value Fund (NASDAQ: HRSVX). The $332 billion fund has absolutely trounced the S&P 500 (AMEX: SPY) since 2000. Even with an extremely rocky 2007, the fund is up over 100% since 2000, where the S&P is actually (ugh) in the red for the same time period.

The secret sauce?

MarketWatch quotes manager Nasgovitz as saying that the team running Select Value has a background covering small- and micro-cap stocks, which don't get as much analyst research coverage, that they apply when delving into larger companies.

What's Nasgovitz buying of late?

One stock the fund bought in the third quarter is Covidien (NYSE: COV), formerly a health-care products division of conglomerate Tyco International (NYSE: TYC). "This was the cash-flow machine behind Tyco before it was spun out, but it didn't get the capital it needed to ramp up research and development," Nasgovitz said.

Heartland also likes retailer Kohl's (NYSE: KSS). Nasgovitz likes this contrarian play because the retailer has "a significant opportunity to grow the store base."

Lastly, Nasgovitz mentioned Legg Mason (NYSE: LM), an investment manager. Nasgovitz observed that Legg Mason's stock, by market cap, is trading at less than 1% of total assets under management, while around 2% is the norm for money managers. The company has struggled with performance and liquidity in some of the structured products its involved in, but Nasgovitz thinks the company is worth more in a better environment.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.