Market Watch : Twentieth Century Funds Continue to Blossom : Investing: James E. Stowers Jr.’s 13 products returned an average of 63.25% last year.

Seated in a wingback chair in his penthouse office, James E. Stowers Jr. picks up a model of the 10-passenger company jet he recently bought.

The founder and president of Twentieth Century Investors Inc. recalls how he searched nationwide for a pilot who would be responsible for the lives of top executives on business trips.

Stowers listed pages of qualities he wanted for this person. One stood out: On command, the pilot would have to turn over the controls to Stowers.

“Now I fly it every week,” the 68-year-old says with a smile.

Stowers’ pilot search incorporated the same exhaustive detail he uses to pick stocks for the company’s mutual funds. His methods have skillfully steered his high-flying funds into some of the fastest-growing and best-performing in the country.

Twentieth Century is best known for its aggressive-growth stock funds. Last year, three of them finished among the top 25 of 1,867 long-term taxable mutual funds, according to Lipper Analytical Services Inc.

With an average 63.25% rate of return for all 13 Twentieth Century funds, investors have been flooding the company with dollars.

More than 15,000 pieces of mail arrive each day. Callers are backed up on the phones. In the first quarter, assets under management grew by more than $1.2 billion to $16.2 billion.

And the company has been working overtime to hire new recruits. Employment has grown from 650 at the end of 1990 to more than 1,300.

The secret? The company zealously sticks to a stock-picking strategy Stowers devised 34 years ago. In 1973, he wrote a computer program to pick out stocks with big growth potential.

“The computer is like a 2-by-4 that hits you over the head and says, ‘Look at this one,’ ” he says.

Today the company monitors some 9,000 U.S. and international stocks. Once the computers identify a stock, a team of fund managers decides how much to invest.

Like a cook with an award-winning recipe, Stowers jealously guards the ingredients he uses to find his investments.

The company will admit to one advantage: the speed with which it reacts to market information.

“I’ll tell you what we do that’s novel,” says Stowers’ son, James E. Stowers III, 33. “Part of it is our structure. We don’t have to get together to talk about it because we’re all singing from the same song book.

“If you’re not as aggressive as you should be, you move toward mediocrity,” he says, stabbing the air with his index finger.

Stowers and his son chuckle as they recall a meeting three years ago when they set a goal of doubling assets in five years.

“It happened the first year,” recalls the younger Stowers, who as executive vice president is in line to take over when his father retires.

But like many growth funds, Twentieth Century’s most popular funds have been unable to sustain the stellar growth they achieved in 1991. They took a dive in the first quarter, particularly in March, a sluggish period for many growth stocks.

The Growth Investors fund, with $3.9 billion in assets, slipped 6.6%, while Select and Vista both dropped more than 7% and Ultra fell 6.9%, according to L/G No-Load Fund Analyst, a San Francisco newsletter.

Moreover, some mutual fund observers say, the recent infusion of capital could change the nature, and future returns, of those funds.

“As (the Select and Growth funds) got bigger and bigger, they had a harder time (focusing) on smaller companies,” which typically have higher growth rates, said Ken Gregory, editor of the newsletter.

“What was once a small- to medium-capitalization fund will gradually evolve into a medium to large fund. For investors who think they’re getting a small- to medium-company fund, they’re not going to get what they think they’re getting.”

The younger Stowers says fund managers have adapted to the inflow of assets by investing in more companies. “Instead of 60 companies, they’ll be looking at 160,” he says.

Company officials concede that aggressive growth funds occasionally take strong hits. But rather than taking refuge in cash positions or other investments, fund managers urge investors to stay put.

The trade-off, the Stowers say, is that when the market turns around, their funds’ growth will more than compensate for previous losses.

A question for the future: whether Twentieth Century will keep its name as the century ends.

Executives admit that a name change is being considered, although Twenty-First Century already is taken.

“When I started the company in 1958, someone said I’d have to change the name” by the year 2000, Stowers says. “I said it wasn’t going to be my problem, and it’s still not my problem.”