Amid the ultra-competitive world of Wall Street money managers, everyone jumps on whatever edge they can find. For top fund managers seeking to create the aura of exclusivity, closing a fund to new investors attracts attention and intrigues new investors trying to get in under the wire. Better still, when successful funds reopen their doors, the result can be a wave of new money.

But when closed funds reopen, the question always arises: Will the fund keep pace with its winning ways of the past? Let's take a closer look.

Closing and opening
Most investors see a fund's decision to stop accepting new money as a positive sign. When top-performing funds get popular, they are often flooded with cash as performance-chasing investors pile into the fund. Once a fund gets too big, it can no longer take new positions in stocks without having a major impact on the market, hurting its chances of getting shares at favorable prices.

The decision to reopen, on the other hand, can come for a variety of reasons. Sometimes, as with Sequoia Fund (SEQUX), the fund may have seen existing shareholders slowly redeem shares over time, and opening its doors can help keep fund managers from having to sell long-held profitable positions, generating tax liability for fund shareholders. In other cases, as with Longleaf Partners (LLPFX), managers identify new investment opportunities that they want to capitalize on, and new investors can bring them the liquidity they need to take advantage. Similarly, an investing style may go out of favor, as it did for Royce Special Equity (RYSEX), only to come back into vogue at a later point.

What they do and how they've done
One interesting thing to look at among reopened funds is what they do with the money they take in and how they perform after they reopen. The three funds mentioned above have done quite well, but they've gotten their results in much different ways.

Sequoia had had mixed results leading up to its reopening, as it failed to take full advantage of the bull market from 2003 to 2007. But after it reopened in 2008, the fund was well prepared for the financial crisis, as its 27% loss in 2008 beat the S&P by 10 percentage points and put it among the top 3% of large-cap blend funds. Nevertheless, the fund went back on its roller-coaster ride last year, missing the rally, but it has held up among the very best funds so far this year. 

Recently, the fund has raised its cash levels to more than 25%, largely from a major reduction in its long-held stake in Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), which still makes up 15% of the portfolio. It has also taken profits on Paccar (Nasdaq: PCAR). The truck-maker has created huge returns but now carries a fairly high valuation, which makes the stock less well-suited for this value-oriented fund.

Since reopening in 2008, Longleaf has had almost the opposite experience from Sequoia. It dropped a full 50% in 2008, crashing to the bottom of the mutual fund rankings. Yet it also took full advantage of 2009's rally, jumping 54% to soar to the top 2% of large blend funds. Recently, the fund has added to already substantial positions in Yum! Brands (NYSE: YUM) and Cemex (NYSE: CX), demonstrating its commitment to finding stocks with a strong global business presence at reasonable valuations. Although many of its stocks have posted losses so far this year, fund managers Mason Hawkins and Staley Cates aren't ones to be impatient about waiting for promising stocks to prove themselves.

The Royce fund has been open a bit longer than Longleaf and Sequoia, reopening its doors in 2006. As a fund orienting on small caps, it has a different set of target investments, but it has also done a good job identifying and benefiting from opportunities. Notably, the fund limited its 2008 losses to 20% and has a three-year performance that beats 96% of its peers. It too has a high 20% allocation to cash right now, but that hasn't stopped it from putting money into stocks such as electronics company AVX (NYSE: AVX) and retailer American Eagle Outfitters (NYSE: AEO). These choices show how the fund scours the small-cap universe, selecting both promising up-and-coming growth stocks and beaten-down companies that used to have larger market caps.

Take a close look
When successful funds reopen, they're worth a close look. But don't just blindly buy shares without understanding their plans for your money and their investing style. If you find a fund that matches the way you like to invest, then a reopening fund can be a great way to get the benefits of professional management from proven winners.

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Fool contributor Dan Caplinger loves a good grand reopening. He owns shares of Berkshire Hathaway and Sequoia Fund. Berkshire Hathaway, Cemex, and PACCAR are Motley Fool Stock Advisor picks. Motley Fool Options has recommended a bull call spread position on Yum! Brands. The Fool owns shares of Berkshire Hathaway, which is also a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy has a vertical jump that'd put Michael Jordan to shame.