Top-performing fund managers occasionally hit a lull. But if they’ve beaten the market over the long term, odds are they’ll do so again. That’s the case with Stratton Small-Cap Value (STSCX), a fund that has absolutely crushed the averages since Gerald Van Horn took the helm roughly 12 years ago.

Since 2000, STSCX has performed almost 10 times better than the S&P 500: It’s up just over 240 percent vs. 24.5 percent for the S&P. And it has accomplished this with less price volatility than its benchmark, the Russell 2000, which returned roughly 95 percent during this time.

To be sure, Van Horn doesn’t deserve all the credit for the fund’s stellar returns. For the first six years of his tenure, Van Horn co-managed the fund with firm founder James Stratton, who launched STSCX back in 1993.

Nevertheless, Van Horn clearly was well mentored, as evidenced by how skillfully he navigated the Great Recession. During the bear market year of 2008, STSCX lost almost 26 percent of its value vs. a 37 percent drop for the market. According to Morningstar, STSCX performed among the top 3 percent of all small-cap blend funds during that treacherous year for the market.

But in the past two years, small-cap funds have lagged the market, as investors played defense and opted for bigger, dividend- paying equities. STSCX has performed in line with its peers, with a two-year total return of around 12 percent.

But even when small-cap stocks are ascendant, STSCX can still fall behind its peers because it eschews riskier names. Also, Van Horn tends to invest in undervalued stocks that are out of favor with the market, but which have potential catalysts for a turnaround, such as a new product, restructuring, or industry resurgence.

To that end, Van Horn looks for companies that generate strong free cash flow but are cheap relative to their competitors. Additionally, he likes companies with a history of positive earnings surprises whose price chart shows near-term upward momentum.

Once Van Horn finds a stock that meets these criteria, he tends to hold for the long term. Indeed, the fund’s portfolio turnover rate was just under 16 percent in 2011.

During third-quarter 2012, Van Horn initiated a position in specialty vehicle manufacturer Osh- Kosh Corp (NYSE: OSK). The company’s biggest customer is the US Department of Defense, so it could be vulnerable to cuts in military spending if Congress doesn’t avoid the so-called fiscal cliff and automatic spending cuts take effect. OshKosh gained over 30 percent in 2012, but it’s close to 50 percent off its five-year high.

In a related play, Van Horn also bought shares of off-road tire manufacturer Titan International (NYSE: TWI). Titan designs and makes wheels and tires for agricultural, construction and military vehicles. Titan’s management expects next year’s revenue to rise more than 30 percent, to between $2.4 billion to $2.7 billion. Titan is up about 5 percent in 2012, but down close to 30 percent from its 52-week high.

No doubt, such staid fare lacks the flash favored by many small-cap specialists. But that’s a good thing: These dull stocks enable STSCX to post outsize gains without excessive risk.