It looks like 2001 may be a lousy odyssey for

Yahoo!

(YHOO)

, but if you look closely at where fund managers place the Web portal in the pantheon of Net stocks, it actually looks a bit worse for the whole pack.

The good news for Yahoo! stockholders is that the stock is among fund managers' favorite pure-play Net stocks, so it may have a level of support among fund managers. The flip side, of course, is that if these stock pickers get rattled, they could send Yahoo! down if they unspool their stakes.

And the bad news for Net investors -- whether they hold stocks or funds -- is that if Yahoo! is a Net blue-chip and it has a cold, it's logical to assume less dominant players and perhaps the broader sector will come down with pneumonia.

Late Wednesday the Santa Clara, Calif.-based company

announced fourth-quarter earnings that matched Wall Street analysts' expectations. Then they lowered the boom, saying that due to wilting online ad spending, this year's earnings would be 25% to 42% below expectations and that its first-quarter earnings would be between 4 and 7 cents a share, compared with the 13 cents analysts were expecting, according to

First Call/Thomson Financial

.

The numbers are

ugly for Yahoo!, down 15% so far today, and also

bode quite badly for the broader Net sector. Keep in mind that Yahoo! and

TheStreet.com's Internet Sector

index already were down 82% and 75%, respectively, since the

Nasdaq Composite's

peak on March 10 at Thursday's market close, according to

Baseline/Thomson Financial

.

For some perspective on why Yahoo!'s troubles could cast such a long shadow, consider that fund managers, or the smart money, appear to have singled out two blue-chip Net stocks above all others, and Yahoo! was one of them.

As the Net sector rocketed to frothy heights and then came crashing down last year, fund managers routinely rolled out the same cliche in one form or another: "There will be few winners and many losers in the Net space, so we're focusing on the winners." In looking at fund ownership among the Net's five-biggest pure-play stars, it seems fund managers think

America Online

(AOL)

, down 25% over the last year, and Yahoo! will be those winners.

Consider that among large-cap growth funds, the biggest stock-fund category with more than $400 billion in assets, 50% own AOL shares and about 26% own Yahoo! shares. After that pair, the percentage of fund owners drops precipitously in other Net bellwethers, such as online auction shop

eBay

(EBAY) - Get Report

(12%), online retailer

Amazon.com

(AMZN) - Get Report

(7.9%) and online ad shop

DoubleClick

(DCLK)

(7.1%).

Net Bellwethers
Percentage of large-cap growth funds owning shares

Source: Morningstar. Data as of most recent portfolio reports.

Even if we look at this from other angles, the same point bears out. Among tech/Net funds, more than 40% own AOL and Yahoo!, far more than the others. And if we take a step back and simply look at how many funds of any type own these stocks, AOL and Yahoo! are still the smart money's faves.

Net Bellwethers
Total funds owning shares

Source: Morningstar. Data as of most recent portfolio reports.

So, if Yahoo! was widely believed to be one of the two blue-chip Net plays and ramping expectations way, way down, it's hard to picture blue skies for Net shops of lesser stature that also rely on ad revenue.

I'm not saying it's impossible to imagine why fund managers bought the stock -- and their confidence might buoy your sprits if you're holding it, too. It's easy to see why so many funds own Yahoo!. After all, the pricey stock's 53.9% average return over the last five years trounces the

S&P 500

by more than 40 percentage points. That kind of eye-popping performance can really boost a fund. Of course, the stock's 86% loss last year and its continuing woes could lead many funds to dump their shares.

Yahoo! Brrrr!
After a stunning run, investors have cooled to Yahoo!

Source: Morningstar. Annualized performance figures through Jan. 11.

Now fund managers will be trying to figure out if there's any justification for owning this stock that not too long ago was one of the Net sector's "must-owns." If you're wondering what funds are being hit hardest by Yahoo!'s news, we've done some leg work.

A list of the 10 funds with the highest percentage of their assets invested in Yahoo! as of their most recent portfolio report is dominated by Internet funds.

The list of stock funds includes giants like the $83.9 billion

(VFINX) - Get Report

Vanguard 500 Index fund and the closed $24.3 billion

(JAVLX)

Janus Twenty fund -- though neither has an outlandish bet on the stock.

Fund Junkie runs every Monday, Wednesday and Friday, as well as occasional dispatches. Ian McDonald writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

imcdonald@thestreet.com, but he cannot give specific financial advice. Editorial Assistant Dan Bernstein contributed to this article.