2008 was a brutal year for pretty much everyone, and some of the top funds were no different. Ken Heebner's CGM Focus Fund (CGMFX), which returned an amazing 80% in 2007, lost 48% in 2008.
CGM’s Heebner, Fidelity’s Lange Falter as Markets Claim Victims
Excerpt from Bloomberg article:
U.S. mutual funds suffered in the greatest stock decline since 1937. The economic recession drove down shares of every industry from energy producers and automakers to technology companies and banks.
Heebner’s fund gained 80 percent in 2007 to beat all peers, largely by buying energy stocks. He was hurt in 2008 after oil prices fell almost three-fourths from a record in July. Known for his rapid movements in and out of stocks, Heebner reversed course in the third quarter by selling energy shares and snapping up bank stocks such as Citigroup Inc. and Bank of America Corp.
“Heebner’s strategy has always been prone to big performance swings,” Morningstar’s Tan said. “This fund has a better chance of making up for lost ground than others.”
Even though Heebner has been piling into banks, it doesn't necessarily mean we all should. These stocks will see a ton of speculation and false moves in the next year. He has the experience of being able to move quickly in and out of shares, and he needs the quick moves off the bottom to help his performance. I wouldn't be suprised if he moves out of many of these bank stocks if we see a sharp rally in 2009.