Ten Stocks Killing Money Manager Returns

by Todd Shriber

There are environments that are conducive to stock picking, and then there are times when the endeavor is a real challenge. This year is proving to be a royal pain for three of the best-known stock pickers in the business: Bruce Berkowitz, Ken Heebner and Bill Miller.

Funds run by Berkowitz of Fairholme Capital Management, Heebner of Capital Growth Management, and Miller of Legg Mason are the three worst performers among large diversified U.S. mutual funds in 2011, Bloomberg reported, citing Morningstar.

Those guys aren’t the only ones having to deal with some rough picks this year. Let’s a have a look at 10 stocks that have proven to be drags for some Wall Street studs (in no particular order):

1) Alcoa (AA):

As a Dow stock, Alcoa has no shortage of institutional ownership, but that also means some indigestion for plenty of fund managers with a chart that is marred by a clear series of lower highs and lower lows.

2) American International Group (AIG):

The one-time Dow component turned poster child for “too big to fail,” AIG is one name Berkowitz remains bullish on, as Bloomberg reports. But when a stock’s chart looks like this, it’s hard to say it’s a screaming buy.

3) Bank of America (BAC):

If it’s not one thing, it’s another for the largest U.S. bank by assets. This one is another problem for Berkowitz and John Paulson’s Paulson & Co.

4) Citigroup (NYSE: C)

See above, because both Berkowitz and Paulson held chunks of this turkey at the end of the first quarter as well. The well-documented, 1-for-10 reverse split engineered by Citi earlier this year has done little to generate enthusiasm for the stock

5) The Knot (KNOT):

The Knot, which has made a name for itself serving the wedding and pregnancy markets, caught the eye of Kian Ghazi’s Hawkshaw Capital Management in the first quarter, according to Seeking Alpha, but it has also been one of the hedge fund’s laggards.

6) National Oilwell Varco (NOV)

A Heebner favorite and an oil services name that plenty of others in the smart money crowd like as well, National Oilwell Varco was a big disappointment in the first quarter with a tumble of more than 11%, according to tickerspy.com data.

7) Enterprise Products Partners (EPD):

Enterprise Products, the largest U.S. master limited partnership, is a favorite among scores of money managers, due in large part to its robust dividend yield. And while not as offensive as some of the other names on this list, the stock has been locked in a tight range in recent weeks, perhaps weighing on traders who were looking for some more upside in this name.

8) Cisco Systems (CSCO):

For some reason, this former tech darling is still a favorite with fund managers. And you wondered why most of them can’t beat the S&P 500? Love affairs with stocks like Cisco explain why.

9) US Bancorp (USB):

One of the not-so-bad names when it comes to bank stocks, few institutions own more US Bancorp shares than Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B). This may prove to be another big Buffett winner in the future, but this stock is being polluted by the stench of other bank stocks.

10) Research In Motion (RIMM):

Like Cisco, the fact that RIM remains a favorite with fund managers explains serial under performance. And like Cisco, the BlackerBerry maker has a decrepit chart.

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