BALTIMORE -- Their offices are down the hall from each other, but their mutual funds are light years apart.

Jack Laporte's T. Rowe Price New Horizons Fund has had three years of double-digit gains, as small stocks have thrown up hefty returns since the bear market ended in 2002. Nearby, Larry Puglia runs the T. Rowe Price Blue Chip Growth Fund. It returned about half as much as Mr. Laporte's fund in several of those years, as the market's biggest stocks -- the ones that Mr. Puglia specializes in -- have lagged behind relentlessly.

Mr. Laporte, 60 years old, and a minor owner of the Orioles baseball team, dubs this added stretch of small-cap victory an "extra inning."

"We're painfully aware of the fact that (the) large-cap growth (category) has not performed well," Mr. Puglia, 45, says.

A day spent with Messrs. Laporte and Puglia offers a window into a phenomenon in which millions of mutual-fund investors have a vested interest. In the past five years, the Russell 2000, a yardstick for small-stock performance, is up more than 40 percent, while the Dow Jones Industrial Average, which tracks 30 of the nation's biggest public companies, has been about flat. In the mutual-fund world, small-cap "growth" funds -- those focused on smaller companies with fast-growing revenue and profits -- have beaten their large-company peers for about seven years, longer than the usual five- to six-year runs.

So when will large-cap mutual funds -- which form the building blocks of most mutual-fund investors' portfolios -- take the lead again?

It would seem to be their time to shine. Small-cap stocks usually do well when the economy is rebounding from a recession because their profits surge more quickly than those of bigger enterprises. Now that the economic recovery is considered in later stages, large stocks' advantages are supposed to kick in. Big companies have economies of scale to draw on when price increases become harder to come by. Many are also better positioned to take advantage of a weaker dollar, with more foreign business units and exporting opportunities.

In the past few years, Messrs. Puglia and Laporte have been quoted in articles with headlines including, "Hard Road Ahead for Small Stocks" and "Large-Company Stocks May Regain Their Edge." T. Rowe Price Group Inc.'s asset-allocation committee steadily has boosted its large-cap growth weighting in the past two years. Yet, the Russell 2000 small-stock index has returned about 5 percent this year, compared with a flat big-company Standard & Poor's 500-stock index -- though bigger stocks have improved in the past several months.

The two managers' experience tells the story of what could be one complete cycle in these stocks' lives. In 1999, The Wall Street Journal profiled Messrs. Laporte and Puglia in an article headlined, "Triumph & Tribulation: A Story of Two Managers." Then, large-cap funds were topping the charts. Mr. Puglia's fund was swollen with gains and purchase orders from investors. In what would turn out to be the last full year of the 1990s bull market, Mr. Puglia was fretting about the lofty valuations of many stocks in his fund; the average one traded at 34 times its past 12 months per-share earnings, according to Morningstar Inc.

Mr. Laporte was struggling to determine which stocks to sell. After several years of mediocre results for small stocks, many investors were redeeming fund shares. Any promising stock Mr. Laporte wanted to buy had to be financed by selling something else. The computer screen on his desk often blinked red, the color of a downward direction of the prices of the fund's stocks.

As it turned out, big-cap stocks would soon tumble, and, after the bear market of 2000 to 2002, small stocks took off. While Mr. Laporte's beloved Orioles continued to chalk up losing seasons, his New Horizons fund -- one of the oldest and largest small-cap funds in the U.S. -- started posting big gains, jumping 49 percent in 2003. The fund has handily beat the Blue Chip fund every year since 2003, up 11.9 percent last year vs. Blue Chip's 6 percent, and it is up this year about 4 percent, while Blue Chip is essentially flat.

As a result, New Horizons last year far outpaced the Blue Chip fund in net new cash from investors. The fund stands at about $7 billion, about $2 billion smaller than Blue Chip. In another sign of the reversal of fortune, the average price-to-earnings ratio of a stock in the Blue Chip fund was recently 22, based on the past 12 months of earnings, below New Horizons' 24, according to Morningstar.

While Mr. Laporte has kept the number of stocks in the fund steady at about 280, about half the stocks are midsize, which he defines as a stock of market cap of $2 billion to $10 billion. Some stocks overlap with Mr. Puglia's fund, in a sign of how much certain small companies have expanded. Overlapping picks include asset manager Legg Mason Inc., circuit maker Maxim Integrated Products Inc., and oil-equipment maker Smith International Inc.

"I can't remember a time where a greater percentage of my portfolio companies have been meeting or beating forecasts" and "come through a period of such strong growth year-over-year," Mr. Laporte says.

One Monday last month, he and a T. Rowe analyst huddled in his office, overlooking the Orioles' Camden Yards and boats on the harbor, to talk about mattress-maker Select Comfort Corp., a New Horizons stock that has nearly doubled in the past year to $33 a share. They discussed a share-buyback program and recent earnings.

"We've made a lot of money on this stock," Mr. Laporte said. "We just don't want to give it all back," the analyst added.

Lunch was a sandwich at his desk, surrounded by stacks of prospectuses, company brochures and research summaries, then more checking on the health of his holdings, to avoid any missteps that might worsen results at this pivotal time for the market. Mr. Laporte spent a half hour with a health-care analyst, Ryan Daniels, from investment company William Blair & Co. Health care has been a hot area for Mr. Laporte, who asked about holdings United Surgical Partners International Inc. and LCA-Vision Inc. He focused on surgery-center capacity, cash flow and stock-option expenses, and asked of one young internal executive candidate: "Is he a grown up?"

Mr. Laporte called William Goodyear, chief executive of Navigant Consulting Inc., whose stock, as with Select Comfort, has slipped in the past month. Mr. Laporte thinks the company expanded too fast, and he inquired about expense-reduction efforts.

"I think your stock looks overly beaten down here relative to other things," he told Mr. Goodyear. It was trading at $19, compared with $22 at year end and $27 at the end of 2004.

Mr. Goodyear agreed and said he asked his team recently, "Are we spending like drunken sailors" or investing for the future? Mr. Goodyear asked Mr. Laporte if he soon might "pick up the phone and bounce an idea or two off" the manager regarding Navigant's financial structure.

"I'd love it," Mr. Laporte said.

Mr. Laporte then walked down the hall to the trading room and put in an order for more Navigant shares, using some of the $5 million to $10 million of new money he had been receiving every week. Mr. Laporte's challenge these days is finding companies expanding, though not so fast that they overspend on hiring, drive up costs and start missing earnings targets.

Mr. Puglia's week, by contrast, was getting off to a discouraging start. On top of investors' general lack of enthusiasm for big stocks, some of the fund's stocks were letting him down for idiosyncratic reasons. A positive Justice Department ruling on Microsoft Corp. was bad for Google Inc., sending the stock down $2 during that day. Among the 250 emails and 30 voicemails he gets daily, he learned Merrill Lynch & Co. analysts downgraded Target Corp. to "neutral," after it posted disappointing quarterly earnings. Insurer UnitedHealth Group Inc. has been a focal point at his group's hour-long weekly morning meetings, as the T. Rowe team discussed its mounting problems with possibly improper stock-option grants to top executives, including a federal criminal probe. A UnitedHealth spokesman declined to comment in light of an independent review at the company.

"I'm not having a great day," Mr. Puglia said by 3:30 p.m., neat stacks of stock research, company presentations and thick blue books of analyst reports around his desk. Energy stocks were drooping after negative developments in Venezuela and Nigeria. The energy sector has been a rare winning area for him, so bad news here is the last thing he needs.

A conference call with a financial company that afternoon was "not particularly reassuring," although one with a gaming company went better. Financial stocks such as American Express Co., Goldman Sachs Group Inc. and State Street Corp. have been winners for Mr. Puglia, too, and the fund has beaten its large-cap growth peers fairly consistently.

One of the emails was from an analyst recommending O'Reilly Automotive Inc. It has been a strong holding in New Horizons -- a winner that "I can't buy," Mr. Puglia said, because its $3.6 billion market cap makes it too small. Instead, he has bought more General Electric Co. stock, especially after a good meeting with Chief Executive Jeffrey Immelt and positive feedback from analysts who visited GE's Chinese operations.

Feeling the pressure to find gems, Mr. Puglia totes home reading material many nights, and met with 17 companies in April. "We've had to be a little bit more creative or a little bit more nimble because the market still hasn't rewarded" a lot of our picks, he says. He has added running, basketball and swimming to his routine partly to relieve stress, on top of the fishing and golf he long has favored. "You have days when you're disappointed in what's happened, no doubt about it," he says.

He thinks better days are ahead. His reasoning: Many large growth stocks are becoming cheaper relative to small growth stocks, and that suggests a turning point for large caps to become more attractive to investors.

A slide from a presentation he made at a recent institutional-client conference in Florida makes this case best. One shows the "forward" price-to-earnings ratio (which is a stock's trading multiple based on estimated, rather than past, earnings) for the largest 100 stocks in the S&P 500, compared with other large-cap stocks. That ratio was as high as 1.4 in 1999 but was 0.9 this year, which means valuations for mega-stocks, which Mr. Puglia increasingly is focused on, are particularly depressed, and, to him, they signal a good buying opportunity.

Mr. Laporte is focused on a chart of his fund's price-to-earnings ratio compared with that of the S&P 500. The ratio was 1.67 as of March, the highest in the nearly two decades he has run the fund. This implies his fund has reached a valuation peak and is likely to decline any day.

"I'm obviously concerned by the fact that small caps ... are unlikely to lead the market over the next few years," he says. His plan is to keep finding unique stocks that march to "their own drum, their own beat."