Wall Street Folly

Ouch, that’s gotta sting:  Bill Miller’s poor recent investment record has caught up with him.  Massachusetts $50.6 billion pension fund fired the legendary Legg Mason manager and managers from four other funds that had responsibility for portfolios of stock totaling $1.8 billion.  The reason: poor performance.  The other firms that were given the boot include Ariel Investments, NWQ, Mazama Capatal Management and Gardner Lewis.  The winner in this deal was State Street Global Advisors, which is now managing around $1.4 billion of the $1.8 billion portfolio.
Massachusetts pension fund fires Legg, 4 others – Reuters

Tags: Bill Miller, Mutual Funds

The high yield market is having a horrible year so far, and the pain isn’t expected to stop soon.  While its bad news for high yield investors, it’s music to a distressed investor’s ear, as it means there’s gonna be opportunities galore as the default rate climbs….

High-yield, high-risk bonds are off to
their worst start ever, and the biggest investors say there’s no recovery in
sight.

Junk bonds have fallen an average 3.9
percent this year, losing about $35 billion, according to data from Merrill
Lynch & Co. indexes. Some funds managed by John Hancock Advisers LLC,
OppenheimerFunds Inc. and Fidelity Investments are down more than 7 percent,
showing that even the largest investors were caught off guard by the collapse.

“The moves have been absolutely vicious,”
said Arthur Calavritinos, whose $1.2 billion John Hancock High Yield Fund has
lost about 9.8 percent since December. The Boston-based manager said it’s the
worst market since he started in finance in 1985.

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Tags: Distressed, Hedge funds, high yield bonds, Mutual Funds

• American Home Can’t Fund Loans, Says It May Have to Liquidate
• C-Bass Subprime Venture in Talks With Investors to Ensure Funds
• Heard on the Street: Betting on Mergers Can Pay Despite Widening Spreads
• Corporate Buyers Hit Gas on Deals
• Subprime Troubles Spread To Commerzbank, IKB
• A Stumble for ‘Bank Loan’ Mutual Funds

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Tags: Mutual Funds, Private equity, Risk arbitrage

The question is, where’s is the lady with the enviable track record gonna land?:

Patel, long known here as the queen of the junk-bond fund world, gave her notice last week and was out the door by Friday. Neither Pioneer nor Patel would say where she is headed. "I’m taking a little time off and then expect to join another organization," she said from her home yesterday.

Patel managed two funds for Pioneer but was best known for running the $4.8 billion Pioneer High Yield fund. Her unusual investment style and strong performance in different kinds of markets made the Pioneer fund stand out.

"Margie Patel is a great manager," says Lawrence Jones , an analyst who follows the fund for Morningstar Inc. "I was pretty disappointed. It was a big loss; there’s no question about that."

Patel, 57, joined Pioneer in 1999, when she was already running the high-yield fund. Then called Third Avenue High Yield , the fund was acquired by Pioneer shortly after it hired Patel. Her fund’s assets at that time: $8.8 million.

The queen moves on – Boston Globe

Tags: bonds, Mutual Funds, Revolving Door

The Washington Post details how the mutual fund scandal unfolded beginning in the summer of 2003 with a tip to a staff lawyer working for NY Attorney General Elliot Spitzer….

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Tags: Eliot Spitzer, Lawsuit, Mutual Funds