Sometimes investing decisions are so simple, like taking a bite of a hamburger.

For William J. Wykle, Philadelphia-based managing director of PNC Bank Corp.'s Compass Capital small-cap equity fund, dropping into fast-food outlets has paid off twice. In the mid-1970s, he recalled, a visit to Wendy's resulted in this thought: "This is better than McDonald's." He bought the stock at $8 per share and sold at about $60.

Another time, he was on a business trip in Nashville when he spotted a Checkers Drive-In Restaurant.

"I was on the way from the airport and I told the cab driver to pull in. I tried a burger, I liked it, and we bought it," Mr. Wykle said, referring to the Clearwater, Fla.-based company's stock. "That's fundamental research."

Most of Mr. Wykle's decisions aren't so easy.

The small-cap sector has taken a beating in recent months, struggling with the volatile technology and telecom sectors. Compass Capital is down 9.3% for the year.

But the fund, with yearend assets of $489 million, has a stellar record, with an average yearly return of 26.85% over three years ended 1996 - best in its class among equity funds managed by banks and thrifts, according to CDA/Wiesenberger, Rockville, Md. By comparison, the Standard & Poor's 500 had an average annual return of 18.85% over the same period.

Last year, even as the small-cap sector was getting hit, the fund had a return of 31.37% - bettering the Standard & Poor's 500, which gained 22% last year, and the average three-year return for all equity funds, 14.52%. Morningstar Ratings Inc., Chicago, gave the fund five stars, its highest rating.

In the growing field of bank proprietary funds, Mr. Wykle is a veteran. He left his native West Virginia, where he was a senior investment officer at One Valley Bank, Charleston, to join a PNC predecessor, Provident National Bank in Philadelphia, in 1986.

"It was an opportunity to do things on a larger scale," said Mr. Wykle, who on a recent day wore suspenders featuring an image of Ben Franklin (the one from the $100 bill) and a necktie with a duck motif, echoing his fondness for waterfowl hunting.

Mr. Wykle moved into his present position in 1987, the year of the last major market crash. Since then, the demand for mutual funds - including proprietary bank funds - has soared.

"I never considered myself a banker; I considered myself an investment person," said Mr. Wykle. He considers his competitors other small-cap funds, not banks.

One of those competitors, Bill Chenoweth, small-cap fund manager at Turner Investment Partners, Berwyn, Pa., said Mr. Wykle is among "less than 20 really top-notch small-cap fund managers" in the country. Others Mr. Chenoweth cited include John H. LaPorte at T. Rowe Price; Roger H. Stamper, First of America Investment Corp.; Bob Kippes, AIM Advisors Inc.; and Christine M. Baxter and Gary L. Pilgrim, Pilgrim Baxter & Associates.

"We're in a market environment that's very hostile to small-growth stocks. In a positive market environment over a longer market cycle, he (Mr. Wykle) will post superior numbers," said Mr. Chenoweth. The Compass small-cap fund's recent performance, he added, "has nothing to do with strategy; that's solid and makes sense."

Though Mr. Wykle's job is devoted to uncovering small-cap funds - those with average market capitalization of $800 million - Mr. Wykle said investors should have a mix of small-, mid-, and large-cap funds as well as international equity funds.

Sectors he likes: software and Internet companies, temporary-help firms, and oil-exploration companies. Of the latter group, Mr. Wykle said he likes firms involved in offshore drilling and other aspects of oil exploration (though not oil companies themselves). He expects to boost the stake of energy-sector stocks from 6% to 8% of the total fund.

Overall, companies without annual earnings growth in excess of 20% won't meet Mr. Wykle's standards.

The small-cap fund holds about 125 company stocks at any given time.

No one stock will make up more than 3.0% of the fund's net asset value, no matter how successful. A holding equal to 0.5% to 1.5% of the fund is more typical.

That's the key to Mr. Wykle's "sell discipline," as he calls it. If something goes wrong, even if quarterly earnings do not live up to expectations, the fund sells.

"That's not to say we can't come back" to a stock, he said. "Big companies can recover from a bad quarter. If a small company reports poor earnings, that could be the end. It could be a slippery slope from there."

Even the best stocks outlive their welcome in the Compass small-cap fund. Mr. Wykle can recall only two funds that have grown to the 3.0% ceiling.

U.S. Robotics, a maker of computer modems, had market capitalization of $500 million when Compass bought the stock; it soared to $6 billion before Mr. Wykle made a sell order, he said.

"U.S. Robotics was just one of those exceptional things: a superior product at a time when the Internet was starting to explode. Everything was right. The company had a good product at a time when the demand for modems was high," he said.

The other company with that kind of growth was HBO & Co., an Atlanta- based firm that makes computerized information systems for the health-care industry.

Mr. Wykle, who heads a team of five people, calls himself "sort of the coach or quarterback," responsible for the "ultimate" buy and sell decisions.

The team, which meets every day, does its own research. It reviews company documents, interviews management, visits company sites and reviews prospectuses for equity and initial public offerings.

And it tries products - a process of gathering anecdotal information that Mr. Wykle said is neither scientific nor necessarily something that can be "extrapolated" to other sites or to the company as a whole. It's just information, something to be considered and, occasionally, eaten.

"They're just idea originators - that's what (Wall Street investment analyst and author) Peter Lynch does," he said. "Sometimes I just take a walk in the mall, not to buy, but just to see where people are, what's attracting attention."

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