Mutual fund titans Bruce Berkowitz and Bill Miller, are in a race to the bottom with another comrade, Kenneth Heebner, after they all bet big on a recovery in financial stocks.
Funds managed by Berkowitz, Heebner and Miller “are the three worst performers among large diversified U.S. mutual funds in 2011,” losing between 11-12% so far this year.
Berkowitz’s $14.8 billion Fairholme Fund has lost 12% so far this year. 74% of the portfolio was in financials, with AIG the largest holding. And AIG’s stock has nosedived this year by almost 50%. Not surprisingly, investors have pulled billions from the fund. Berkowitz admitted last month on an investor call he was wrong about the bet.
Both Miller, of Legg Mason) and Berkowitz bet heavily on financials. Heebner, of Capital Growth Management, was bullish on automakers.
Banking and auto are the two worst-performing industries in the S&P 500 this year.
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