While last year was another boffo one for U.S. stock funds, not every fund made it to the party. A few blew their opportunities and came up dry.
Here are our nominees for the biggest flops of 1996:- Dreyfus Premier Aggressive Growth A (total return, -2.4 percent), Dreyfus Premier Strategic Growth A (-18.3 percent) and Drey-fus Special Growth Investor (-2.6 percent).
All three are managed by Michael Schonberg, hired in 1995 to revive Dreyfus' aggressive stock funds. He packed them with racy, fast-growing stocks and invested with borrowed money, which ballooned losses.
Dreyfus has buried the records of two of these losers by merging Premier Strategic Growth into Premier Aggressive Growth and Dreyfus Special Growth into Dreyfus Aggressive Growth.
- Fidelity Advisor Strategic Opportunities T (1.5 percent). This fund is supposed to invest in stocks of companies undergoing some change, such as new products, new technology or new executives.
But manager Dan Frank feared a poor stock market and loaded 25 percent of the fund's assets into long-term Treasury bonds, which plunged early in the year. In mid-March, Harris Leviton replaced Frank.
Leviton put Strategic Opportunities back on course by buying shares of companies with "special situations," but then big blue chips began to outpace the small stocks Leviton liked. From now on, Leviton says, the fund won't make big market-timing bets.
- Strong Discovery (1.5 percent). Dick Strong has his name on the door of a company with $23 billion under management. He runs Discovery himself, with erratic results. His mistake last year was to play market-timer rather than stock-picker. He raised cash and filled 40 percent of his fund with Treasury bonds.
The next time Strong fears a market meltdown, he says, he'll put no more than 25 percent of assets in cash unless extraordinary circumstances warrant it. Nor will he flirt with bonds again anytime soon.
Perhaps most telling of all: Strong has brought in a co-manager.
- Warburg Pincus Growth & Income Common (-1.2 percent). Growth-and-income funds typically focus on larger, dividend-paying companies. Not so this fund, whose manager, Anthony Orphanos, likes gold-mining and other metal stocks and sometimes trades rapidly.
Orphanos's approach failed dismally in 1996.