, the largest U.S. student loan company, announced it was being bought for $25 billion, the company's stock shot up almost 18% for the day. As a result, the stock performance buoyed a few mutual funds that had large stakes in the lender. The
Vanguard Windsor II fund (VWNFX) has the largest stake of any fund in Sallie Mae at 3.81%. The other leading shareholder funds include
American Century Ultra Inv (TWCUX) at 1.33% and the
Janus Contrarian fund (JSVAX) with 1.11%.
The holding amounts for the funds are as of the end of 2006, except for the Janus fund, which is as of the end of January, as reported by fund tracker Morningstar.
Although the Vanguard Windsor holds significantly more shares in Sallie Mae than any other fund, it was the Janus Contrarian fund that benefited most from Sallie Mae's big day. The Contrarian fund rose 2.3% to 19.09 for the day. The Contrarian has almost 4% of its entire assets in that one stock, compared with 1.57% and 1.88% for the Windsor and American Century. But those two funds fared well too yesterday, increasing 1.22% and 1.08% respectively.
While the acquisition news sent Sallie Mae's shares soaring, it sent rival student-lending specialist
reeling. Shares of First Marblehead plunged more than 22% on fears that it will lose significant business to Sallie Mae after its merger.
As Marblehead's shares fell, it weighed down some mutual funds. The funds with the largest stakes in Marblehead include
Vanguard Selected Value (VASVX),
Baron Growth (BGRFX) and
Davis Financial A (RPFGX); the funds own 1.96%, 1.51% and 1.29% of outstanding Marblehead stock, respectively.
The holding amounts for the funds are as of the end of 2006, except for the Baron fund, which is as of the end of September 2006, according to Morningstar.
Despite the beating Marblehead took, the funds heavy in the company managed to keep their heads above water for the day, albeit slightly. The Davis Financial fund should have been hardest hit by Marblehead's woes. While the company accounts for 2.21% and 1.86% of the Vanguard and Baron funds, it makes up 6.5% of the Davis fund's holdings. But the fund eked out a 0.15% gain on the day. The Vanguard fund rose 0.45%, and the Baron Growth fund even had a decent day, rising almost 1%.
J.C. Flowers, along with private-equity firm Friedman Fleischer & Lowe, agreed to pay $60 a share, or $25 billion, in cash for Sallie Mae. The groups will invest $4.4 billion and own 50.2% of the lender.
Bank of America
J.P. Morgan Chase
will each invest $2.2 billion and will each own 24.9%.