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Targeting Value in Eastern Europe

Mayo and his five co-managers typically meet with company managements before buying shares, and once they take a stake, they meet with the company four times a year. Mayo estimates the team collectively attends about 800 to 1,000 meetings a year in about 20 countries.

The fund managers focus on companies with sound management that are reporting higher earnings, sales and cash flow growth than their competitors. The fund owns about 40 stocks, with the 10 biggest holdings accounting for 59 percent of assets.

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Banks, including Garanti, are the fund's largest investments, as Mayo bets that an increase in personal income will boost consumer borrowing and spending. Dogus Group, Garanti's owner, last month said it will renew efforts to find a buyer for the company after a planned sale to Banca Intesa SpA, Italy's largest bank, fell through in 2004.

Mayo boosted his stakes in Russian telecom-service providers Mobile TeleSystems and AO VimpelCom in the first quarter. Moscow-based Mobile TeleSystems, Eastern Europe's largest mobile-phone company, added 7.5 million new subscribers in the fourth quarter, the company said last month.

Mobile TeleSystems has been expanding services, including in the former Soviet republics Uzbekistan and Ukraine. Shares of the company, also known as MTS, rose 2.1 percent in the past 12 months. The stock closed Friday at $34.22 on the New York Stock Exchange.

The fund doubled its position in VimpelCom to about 9 percent of assets from 5.2 percent since the end of 2004. Shares of VimpelCom climbed 1.9 percent in the past year.

"It had a bit of a sell-off for rather erroneous reasons at the end of last year," said Mayo, who began his career at Schroders PLC in Hong Kong and holds a degree in economics from Bristol University in Britain.

Shares of VimpelCom plummeted 22 percent, the sharpest drop in six years, on Dec. 8 after it was disclosed the company had received a claim for back taxes, penalties and fines for 2001. The shares rebounded to end the year up 48 percent.

"That's what I call an overreaction," Mayo said. The stock closed Friday at $34.84 a share on the NYSE.

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