Most mutual fund managers look at growth rates along with some measure of value to guide them in making buys and sells.

Growth fund managers focus more on a company’s growth rate. Value managers look more at valuation measures, such as P-E ratios.

Todd McCallister, 42, says he runs the Heritage Series Trust:MidCap Stock Fund/A (HMCAX) differently. He doesn’t pay much attention to either. And he doesn’t like being pigeonholed in one category or the other.

That’s not the way you buy a business,” said McCallister. If you were going to buy, say, a dry-cleaning shop, you would first want to know about its cash flow. After all, you’ll want to be able to pay your bills from its operations.

Then you’d want to see how easy it would be for a competitor to open a shop right across the street. You’d want to see if the dry cleaner had any labor problems.

But you wouldn’t be asking yourself what the P-E ratio was or at what rate the company was growing, McCallister says.

McCallister’s approach works for him. The St. Petersburg, Fla., fund was up 4.7% this year going into Thursday. It’s been up every year since it started in late 1997, including 19.5% in 2000 and 19.2% in 2001.

McCallister seeks companies with some kind of advantage in their industry. Either they are the low-cost producer, they have better management or they use technology better.

Some of the companies in his portfolio, he says, have done a great job of adapting to the Internet.

One is Information Holdings (IHI). You’ve probably never heard of it unless you’re an engineer, lawyer or in a corporate marketing department.

The company maintains a huge database of trademarks and patents. If someone wants to find out if an invention has been patented or a trademark registered, he once had to write Informational Holdings and wait for an answer in writing.

Now, says McCallister, customers log onto a Web site and get their answer immediately. The company has found a way to use its database more efficiently. And no one is going to be able to duplicate what they have.

The same with ProQuest Co (PQE), a small company that is among his biggest holdings. The company is the former Bell & Howell. It maintains a huge database for academic and library use. It’s growing by taking its expertise to the car parts business.

Instead of a big book filed with the names and serial numbers of engine parts, the company keeps a central database. Workers in dealer service departments can log on to look up the part they need.

Another example from McCallister’s portfolio: Dun & Bradstreet (DNB), whose financial database on 66 million companies can’t be duplicated and is available to customers online, substantially cutting costs, he says.

McCallister has wide berth in the size of companies he can buy. His mid-cap range is larger than most. Eighty percent of his holdings must be between $500 million and $10 billion. As long as he maintains that, he is free to buy some of the small companies flying under Wall Street’s radar. The $272.7 million fund’s median market cap is $1.9 billion.

He tries to hold his stocks three or four years.

He believes in diversifying the fund, keeping no more than 7% to 9% in any one industry.

Radian Group (RDN) is another of McCallister’s picks. The company is one of the few players in the field of mortgage insurance. Because insurers must be financially strong, few qualify for this type of high-margin business.

The company insures the mortgages of home buyers who can’t make a big enough down payment. McCallister says its default rates have been low despite rising housing prices. He doesn’t see the housing bubble that some commentators say they’ve seen.

Flowserve Corp (FLS) is an example of the boring, unnoticed companies McCallister likes to buy. The company makes industrial-strength valves and pumps.

It’s likely to be a big beneficiary of improved industrial capital spending, which has been in a slump since 1997. The company’s acquisition of Invensys’ flow control division, a competitor, should boost earnings growth, McCallister says.

McCallister describes another holding, First Health Group (FHCC), as a health maintenance organization on steroids. The company handles the administration and medical networks for companies that want to self-insure their health coverage. First Health shoulders none of the risks. The company does. And it doesn’t have to provide the medical care.