Wally Weitz, Omaha's second most prominent investor, is on a tear.

The three mutual funds managed by Wallace R. Weitz & Co. have so far this year outperformed Berkshire Hathaway Co.--the investment vehicle of the "oracle of Omaha," Warren Buffett. Weitz's biggest fund, the $2.3 billion Weitz Value Fund, has beaten Berkshire the past three years.

"He's been knocking the cover off the ball," said Geoff Bobroff, an independent investment management industry consultant in East Greenwich, R.I.

Like Buffett, Weitz made investments in "value" stocks--cable television companies such as Adelphia Communications Corp.--pay off. Now the challenge for the 16-year-old firm is to maintain the returns as cash pours in and as the bull market ages. Weitz already is trying to tamp down expectations.

"Lots of investors are bound to be disappointed," because market returns in the next five to 15 years are likely to be much lower than recent gains, said Weitz, 50, a native of Pittsburgh. "I assume our relative performance will cool off."

That performance has earned Weitz's three equity funds the top five-star ratings from Morningstar Inc., the fund-tracking company, and lured a net $1.3 billion of new investment in the first half, according to Financial Research Corp. in Boston.

The inflows, coming after the funds were added to Charles Schwab Corp.'s fund supermarket, boosted assets under management a third to $4 billion. They also topped the totals attracted by rivals such as Amvescap PLC's Aim and Invesco units and Goldman Sachs Asset Management.

After years of drawing new customers by word of mouth, the rush of what Bobroff called "hot money" could make it tougher to match recent returns. Minimum investments through Schwab are $2,500, a 10th of the minimum when they're bought elsewhere.

The Weitz Value Fund has gained 14.1 percent this year through Thursday. That compared with Berkshire's 9.3 percent decline and the 11.7 gain in the Standard & Poor's 500 index. Its 100.6 percent cumulative return since 1996 tops Berkshire Hathaway's 83 percent gain, according to Bloomberg data.

The Weitz Partners Value Fund, with about $890 million, also has topped Berkshire Hathaway's performance since 1995. Weitz Partners Value is up 15.8 percent this year and has a cumulative gain of 143.2 percent since 1995. Berkshire Hathaway is up 140.3 percent.

The $800 million Weitz Hickory Fund, closed to new investors a year ago, is up 19.6 percent this year. Hickory Fund is ahead of Berkshire Hathaway since its inception in February 1997.

Still, Berkshire stock has outperformed the S&P in all but four of the past 33 years that Buffett has run the company. PaineWebber Inc. analyst Alice Schroeder has estimated $10,000 invested in Berkshire when Buffett took over in 1965 would be valued at $51 million.

The same amount invested in the S&P over that time would have grown to $132,990.

"What's remarkable is the performance was achieved in a difficult period for value-based shops," said Kunal Kapoor, an analyst at Chicago-based Morningstar.

The Weitz funds' returns have benefited from holdings in media and telecommunications stocks, which have soared the past year amid a spate of industry mergers.

At the end of June, the biggest position of Weitz Funds, which hold mainly small- and mid-cap companies, was in Chicago-based Telephone and Data Systems Inc.

The firm also owns Liberty Media Group, Century Communications Corp., Countrywide Credit Industries Inc., and financial companies, such as Sallie Mae, Golden State Bancorp, Allied Capital Corp., United Asset Management Corp. and Berkshire Hathaway.

At the same time, it has increased its cash level to more than 30 percent and increased holdings of financial stocks while whittling down its position in telecommunications companies.

Weitz, who formed his fund company in 1983 after working as an analyst in Omaha and New York, manages the Value and Partners Value funds. Rick Lawson, 42, manages the Hickory fund. The firm employs more than 20 people.

The company's $4 billion in assets generate an estimated $40 million in annual fees. Weitz also has one money-market fund and another investing in fixed income.

Weitz said he's increasing cash positions because in general "valuation levels" are running ahead of what he believes companies to be worth.

Those are the same concerns voiced by Buffett. That and their shared address in the heartland is where their similarities end, says Weitz, who dismisses comparisons between his recent performance and Buffett's.

"I don't think Buffett's losing any sleep," Weitz said.

"It's flattering when people mention us together, but that's because we're both Omaha investors," he said. "I wish there were more similarities."