Sallie Mae Floats Funds' Boats

The merger announcement that sent Sallie Mae soaring has buoyed some mutual funds too.
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When

Sallie Mae

(SLM) - Get Report

, 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

(VWNFX) - Get Report

Vanguard Windsor II fund (VWNFX) has the largest stake of any fund in Sallie Mae at 3.81%. The other leading shareholder funds include

(TWCUX) - Get Report

American Century Ultra Inv (TWCUX) at 1.33% and the

(JSVAX) - Get Report

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

First Marblehead

(FMD)

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

(VASVX) - Get Report

Vanguard Selected Value (VASVX),

(BGRFX) - Get Report

Baron Growth (BGRFX) and

(RPFGX) - Get Report

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

(BAC) - Get Report

and

J.P. Morgan Chase

(JPM) - Get Report

will each invest $2.2 billion and will each own 24.9%.