All-Star Managers Have Tanked This Year

2011 was not a kind year to two of the industry darling money managers.

According to investors, John Paulson’s Advantage Plus Fund was down a whopping -52% through December 16th. That’s right, that is not a typo, -52%. Even his non-levered Advantage Fund is down -36% for the year. Given that the market is flat for the year and the average fund lost -4.37% through November, it is safe to say that the Advantage Plus Fund blew up. What’s harder to say is what the long-term effects will be and if investors cut and run or stick with Paulson, who has a bullish view on the economy. Even Paulson’s Gold Fund is down nearly -10% for the year, while gold is up 7%.

Another all-star manager, this time on the mutual fund side of the business, is having an equally hard go of it. Bruce Berkowitz’s Fairholme Fund (FAIRX) is going to end the year down somewhere around -35%. Again, this is in a year where the market was flat. Unfortunately, things have only gotten worse for Berkowitz (who notoriously was bullish on bank stocks such as AIG and Bank of America earlier in the year), since the Fairholme Fund owns over 15% of outstanding shares of Sears. Ouch!