HIS SEMIANNUAL REPORTS were fun to read. But his returns left investors crying. Robert Sanborn, one of the most articulate defenders of the value investing strategy, was removed today as manager of the $2.2 billion Oakmark Fund (OAKMX). He will be replaced by Bill Nygren, manager of Oakmark Select (OAKLX) and Kevin Grant, a senior investment analyst who served as a backup to Sanborn.

Sanborn, who managed the fund since its inception in 1991, led it to record-breaking returns in the early 1990s as value stocks, and especially financial stocks, outpaced the S&P 500. But, as technology stocks stole the market lead, Sanborn stubbornly refused to participate. Meanwhile, top picks like Philip Morris (MO) and Mattel (MAT) gave shareholders a beating. Last year, Oakmark finished dead last in the large-cap value category, with a 10.5% loss. In 1998, it finished in the bottom 7% of the category. So far this year, it is down 15.1%. Meanwhile, redemptions have pounded the fund, which is now half the size it was two years ago.

Robert Sanborn will remain with Harris Associates, continuing to manage several separate accounts. "I have total confidence that Bill and Kevin will successfully execute Harris Associates' long-term value investment philosophy," Sanborn said in the company's press release. "I appreciate the opportunity to have managed the Fund, and expect to remain a long-term shareholder."

While Sanborn's value portfolio has suffered, Nygren has led Oakmark Select to strong returns. The focused fund has finished in the top 25% of mid-cap value funds in each of the past three years. According to Harris, Oakmark will continue to pursue a value-oriented investment strategy.