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Larry Pitkowsky and Keith Trauner sat out the first bubble. Now the value investors justify why Google is a top holding and Microsoft is more exciting now than a decade ago.

FORTUNE — Some splits in the mutual fund world are acrimonious, some aren’t. This one fell somewhere in the middle. Larry Pitkowsky and Keith Trauner were happy working with Bruce Berkowitz at the Fairholme Fund. The fund’s record was enviable through 2007, and it was attracting more and more new money by the day. If they continued picking winners and spotting trouble ahead — Fairholme’s annual reports fretted early about toxic bank holdings leading to a market shock — Pitkowsky and Trauner might also be honored, as Berkowitz later was, as Morningstar’s U.S. stock manager of the decade.

But a few years back Berkowitz took Fairholme in a new direction, one emphasizing private deals — a recent example was Fairholme’s deal with hedge fund manager Bill Ackman last year to pull General Growth Properties out of bankruptcy. Berkowitz hired an M&A whiz to help him, and he slowly phased out Pitkowsky and Trauner’s work. The two sides agreed not to criticize each other and went separate ways.

Now Pitkowsky, 46, and Trauner, 54, are back. Their new mutual fund named Goodhaven opened for business in April. In a recent government filing, they disclosed $45 million in assets. Their stock picks reflect some of Fairholme’s historical strategy, but what really stands out is that the managers were hoarding more than 50% of assets in cash, as of the filing. It’s fallen some since then, the managers say, but it’s still high.

“The Fed is pushing people to do what they don’t want to do,” Trauner says, referring as an example to older investors who might buy riskier stocks and bonds to compensate for zero percent interest rates. Stocks might not be overly expensive, he says, but because Goodhaven isn’t finding the screaming buys of late 2008, the two are content to wait for possibilities. He deadpans, “We’re really skeptical that zero percent interest rates will last forever.”

It’s one of the few macroeconomic predictions you can get out of them, if you can even call it that. Pitkowsky and Trauner are more likely to read 10-Ks over the weekend than pontificate about global economic themes.

Their biggest stock pick is Microsoft (MSFT). “If you just read the press, you would think that these guys are a disaster,” says Trauner. Even easier, pull up a stock chart: Microsoft shares trade below their levels an entire decade ago. But for same reason Pitkowsky and Trauner avoided technology companies during the last boom — preferring to buy stable businesses like Berkshire Hathaway — they’re buying some tech companies this time around.

First, they say, Microsoft doesn’t have to beat Apple in cell phones and tablets for its stock to rise. PCs still dominate the world computing market, and it’s a growing market outside of the U.S. and Western Europe. “Everyone’s excited because Apple sold 20 million units last quarter,” says Trauner.  “Well, the PC replacement market is 300 million.” Don’t forget that Microsoft is entrenched in the business world, where switching from Windows is tremendously expensive. It also dominates office applications. Plus it bought 1.7% of Facebook before the social network’s valuation exploded. Microsoft doesn’t get any love from the market but these fund managers think that’ll change. Its earnings per share can grow from $1.40 five years ago to $2.85 next year, they predict. Adjusted for Microsoft’s cash hoard, the two estimate they bought shares for seven times Microsoft’s operating earnings.

Another one of their favorites is Google (GOOG). The stock recently ran-up $100 from their purchases around $500. “Everyday we’re plagued by the thought that we don’t own enough of this stuff, ” says Trauner. For Google, it’s the ad business that makes the company great, he says. Forget the criticism about not making money with Android. “It’s such a simplistic view,” says Pitkowsky. The reason Google offers Android for free is because it helps grow Google’s wide moat around digital advertising. Most importantly, it keeps competitors out. The stock jumped 20% this month after blowout earnings. But if you take out $100 a share in cash, and understand Google can soon earn $40 a share, investors are paying 12 times operating earnings. “It just seems way too low,” says Trauner.

The obvious question for a couple value investors is how two tech stocks make it into their top holdings. Just a decade ago, almost a third of Fairholme’s investors left during the tech bubble because they avoided the highflyers. The answer is about price. Google, and certainly Microsoft, don’t command outsized valuations. It’s also about the sector changing.  “A decade ago or longer there was such radical change in marketplace,” says Trauner, “it was hard to understand which companies or technologies would persist. Since then there’s been tremendous consolidation.”

Their only macro view seems to be that interest rates will rise sometime in the future. Its hardly noteworthy, except Federated Investors is a company that will surprise people when rates start rising. About 75% of its business comes from money market funds. It has been waiving fees on the funds to the tune of $200 million a year so it can offer investors at least a few basis points of interest. With only 100 million shares outstanding, that’s real money, contend Pitkowsky and Trauner. “There’s a good chance it will have a Lollapalooza effect,” says Trauner. “The feed waivers go away, and assets increase at the same time.” The stock is up 4% over the past year.

After helping lead the Fairholme Fund to superstar status last decade, the two stock pickers might be worth paying attention to.

Filed under: Term Sheet

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Lawmakers in Washington are ignoring the real problem: A generation is losing work skills. We need to fix that.

By Nina Easton, senior editor-at-large

FORTUNE — Has anyone in Washington noticed that 20% of American men are not working? That’s right. One out of five men in this country are collecting unemployment, in prison, on disability, operating in the underground economy, or getting by on the paychecks of wives or girlfriends or parents. The equivalent number in 1970, according to the McKinsey Global Institute, was 7%.

Both political parties have proven their talent in ginning up outrage over the federal budget, whether it’s spiraling spending or millionaires collecting tax breaks on private jets. So today a tiresome, and dangerous, debt drama unfolds in real time, freezing leaders in both parties in their respective partisan corners. Are these same leaders capable of confronting the fearsome fact that 4.3 million Americans have been jobless not just for months–but going on years? We are in danger of losing a generation of work-habituated Americans, especially men–and lawmakers can’t see their way past November, 2012.

This is a conversation that goes beyond a stubbornly high 9.2% unemployment rate and last week’s unnerving news that company layoffs are ticking up again. While we all know there is a job shortage, employers are increasingly talking about a “talent shortage” — they can’t find qualified workers even for the jobs that are available. “We found that 30% of companies surveyed had openings for six months or longer, and can’t find the right person,” says Susan Lund, research director for the McKinsey Global Institute.

With slack demand, companies can afford to be pickier about who they hire — and commonly steal away already-employed workers rather than dip into a riskier pool of people who have been out of work for months or years. “As long as there is slow demand, [they say] ‘I can delay hiring and when I do hire a person it’s the perfect person,’” says Jeff Joerres, president and CEO of ManpowerGroup.

Google (GOOG) has anywhere from 1,500 to 2,500 jobs open at any given time that take months and months to fill, says Laszlo Bock, the company’s senior vice president of people operations. And it’s not just computer and engineering skills that companies need. Frits van Paasschen, CEO of the Starwood (HOT) hotel chain, says “we have a whole set of jobs”—like international tax accountant—”where we can’t find” qualified applicants. Joerres says the No. 1 need for companies right now is sales person: Someone skilled not only in personal relations but also able to master the details of an integrated supply chain.

All three executives spoke at an Atlantic magazine-sponsored jobs forum last week that exposed a stark disconnect between the jobs that are available—and the increasingly rusty skill-sets of those who are unemployed, especially for long periods of time. People have “no idea what skills they should have to find a job,” says Bock.

That’s a place where businesses have to start stepping up to the plate. It’s true that McKinsey reports an expansion of training programs. And there are companies like Delta partnering with a state university to produce airline-ready managers and associations like the Manufacturing Institute working with community colleges on certificate programs. But Joerres says a lot of companies don’t offer training for prospective employees because—with slack consumer demand and weak job market—they don’t have to. “If they don’t have to, they aren’t going to,” he says.

The longer a worker is unemployed, the farther he or she falls behind in sellable skills in a fast-paced global economy. But there is an even more fundamental question behind the rise in long-term employed rates: Are our public policies contributing to the rise of millions of Americans who lose the habit of work?

Whether you believe (as some economists do) that unemployment insurance discourages immediate job searching—or not—it’s worth asking whether the American “unemployment” system should more closely follow a program like Germany’s “re-employment” system, which cut stubborn long-term unemployment rates in that country.

And then there is federal disability insurance, where the percent of American adults collecting checks has doubled since 1989 — even though the American population isn’t any less healthy, or more mentally disabled (the fastest growing disability claim). “It is difficult to overstate the role that the [disability program] plays in discouraging…the ongoing employment of non-elderly adults,” concludes a study by MIT’s David H. Autor and the University of Maryland’s Mark Duggan.

If that’s not enough to grab the attention of political leaders, here’s a 10-year peek into the future of the U.S. labor force if current trends continue: A continued expansion of workers collecting income from disability rolls plus another four million high school dropouts–on top of today’s 15.4 million.

And yet, according to a ManpowerGroup report, at the same time companies will face an “acute talent shortage.”

Where’s the outrage over that?

Filed under: Contributors, Term Sheet

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Fortune’s curated selection of the weekend’s most newsworthy tech stories from all over the Web. Sign up to get the newsletter delivered to you every day. 

A glimpse of Facebook’s new HQ. Photo: Aaron Sittig via TechCrunch

* Facebook started moving the first bunch of lucky staffers into its new 1-million square-foot Menlo Park campus. Company product architect Aaron Sittig documented the move with some choice snapshots.

* Apartment-swapping startup Airbnb is on a roll: it just raised $112 million at a $1 billion valuation, led by Andreeessen Horowitz, bringing Airbnb’s total funding to $119.8 million. (TechCrunch)

* News curation app Flipboard introduced in-app advertising by way of a partnership with publishing house Condé Nast and American Express. Readers of The New Yorker should expect to see them, followed by regulars of Wired, Bon Appétit, and other magazines. (Flipboard)

* Why Hulu, billed as “tomorrow’s TV,” looks boxed in. (The New York Times)

* How the Valley was won: the birth of tech in Silicon Valley. (Digital Trends)

* Decoding your e-mail personality. (The New York Times)

* Social media background checks? How more employers are checking candidates’ social media history. (CNN)

* Five current trends shaping the TV industry. (Mashable)

Don’t miss the latest tech news. Sign up now to get Today in Tech emailed to you each and every morning.

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“A little company in Cupertino,” he says, “showed up with a different strategy”

Source: Paley Center for Media

There is plenty of food for thought — and plenty to take issue with — in the breakfast talk Elevation Partners co-founder Roger McNamee gave at the Paley Center for Media late last month. SplatF‘s Dan Frommer and Business Insider‘s Pascal-Emmanuel Gobry have already linked to it. Mark Stephens has extracted one I, Cringely column — on the decline and fall of Facebook — and says he could have done a half-dozen more.

If you have 57 minutes to spare, there are worse ways to spend them than to watch McNamee’s speech in its entirety. It’s available on FORA.tv here (Flash required).

What interested me (and what we extracted below as a brief iOS-friendly YouTube video) was what McNamee had to say about Apple (AAPL), especially vis a vis Google (GOOG).

McNamee has changed his tune about the iPhone since he famously predicted on its two-year anniversary that nobody who bought the original model would be using any iPhone one month later. (See here.)

In his Paley presentation, which is mostly about HTML5 and why publishers should dive into it, Apple is the entrenched power that, in his view, dominates the Internet landscape. (If you don’t own an iPad, he told his audience, buy one today. It’s “the most important device since the IBM PC.”)

Google, in McNamee’s colorful analogy, is a Confederate general trying to defend Atlanta while William Tecumseh Sherman (presumably played by Steve Jobs) is pushing the company into the sea. (McNamee, it must be said, is a venture capitalist who has a lot of sticks in this fire.)

Still, this is good stuff.

Below: McNamee on Google’s “dirty little secret” and how Apple has outflanked it. Just over 3 minutes on YouTube.

Filed under: Apple 2.0

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