Wednesday's Headlines: Legendary fund managers lose their groove
Celebrity fund investors Bruce Berkowitz and Bill Miller have lost their mojo in recent years, according to the Wall Street Journal.
Berkowitz's Fairhome Fund lost 18% in the first week of August, including a 9% drop on Monday, while Miller's Legg Mason Capital Management Opportunity Trust was down 22% in August through Monday, and slid 36% since the beginning of the year. It seems that a change of strategy was each manager's downfall. Writes the Journal:
Berkowitz avoided most financial stocks, arguing it was impossible to understand their businesses. He won further plaudits for snapping up corporate debt on the cheap during the crisis and riding it back to big profits during the rebound.
But in 2010 Mr. Berkowitz loaded up on financial stocks, a bet that has cost him. As of the most recent data available, his fund had 75% of its stock holdings in financial-services companies, compared with a 19% weighting for financials in the average large-value mutual fund tracked by Morningstar. Legendary Miller was equally left vulnerable by his financial stock holdings.
The biggest banks are making fewer SBA loans. [NYTimes]
HSBC will reap a $2.4 billion after-tax gain from the sale of its U.S. credit card division to Capital One, as the lender focuses on growth in emerging markets. [WSJ]
Switzerland and Germany finalized an accord to end a dispute over tax evasion by wealthy Germans holding cross-border accounts with Swiss private banks. [WSJ]
South Korea banned equity short sales while the two biggest state-run funds said they may boost investments as the government seeks to shore up its market. [BusinessWeek]
BofA CEO Brian Moynihan has no plans to step aside, despite a 43% share price drop this year. [Bloomberg]
Investor groups led by Blackstone Group LP, Centerbridge Capital Partners LLC and TPG submitted initial offers for Anglo Irish Bank Corp.'s $9.65 billion of U.S. property loans, according to four people with knowledge of the sale process. [BusinessWeek]
Commonwealth Bank of Australia's second-half profit rose 22% o a record as the country's biggest lender increased business and household lending. [Bloomberg]
Citigroup agreed to pay $500,000 for failing to prevent a former sales assistant from taking $750,000 from 22 ill and elderly clients over eight years. [Investment News]