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Fund Managers Bill Miller, Bruce Berkowitz Come Back Strong in 2012 from Dismal 2011

By Dan Weil   |   Thursday, 10 Jan 2013 08:12 AM

Renowned mutual fund managers Bill Miller and Bruce Berkowitz placed No. 1 and No. 2, respectively, in The Wall Street Journal's ranking of mutual funds in 2012, rebounding from a dismal 2011.

Miller runs Legg Mason Capital Management Opportunity with Assistant Manager Samantha McLemore, and Berkowitz runs Fairholme Fund. Both lost more than 30 percent in 2011.

But last year, Miller’s fund generated a 40.7 percent total return, and Berkowitz’ a 35.8 percent return. That compares to 16 percent for the Standard & Poor’s 500 Index.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

The Legg Mason fund benefited from its positions in home-building stocks, including PulteGroup, KB Home, and Lennar Corp. It also did well with banks such as Citigroup and Bank of America.

Financial stocks lifted Fairholme Fund too, including Bank of America and particularly American International Group, which makes up more than a third of the fund’s assets.

The fund also reaped the rewards of stakes in Sears Holdings and St. Joe.

Most of Miller and Berkowitz’ competitors aren’t doing so well. A Goldman Sachs analysis of actively managed mutual funds with $1.3 trillion of assets found that almost two-thirds of the managers underperformed their benchmark last year, The Fiscal Times reports.

Meanwhile, Morningstar named Mairs & Power Growth Fund as its top U.S. stock fund for 2012. The fund produced a return of 22 percent last year.

Editor's Note:
How You Lost $85,000 During the Last Decade. See the Numbers.

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