Morgan Asset's Kelsoe Set to Lose Seven Funds After Vote

The last step in James Kelsoe's transformation from top-ranked bond investor to subprime-crisis poster boy may come July 11 when shareholders of his seven funds vote on whether to dump him for a new manager.

The funds, with combined assets of $611 million, have lost an average 67 percent in the past 12 months, prompting investor lawsuits against Kelsoe and his employer, Memphis, Tennessee- based Morgan Asset Management Inc. Assets in his largest fund, Regions Morgan Keegan Select High Income, have plunged to $104 million from a peak of $1.23 billion in 2006.

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A regulatory filing that listed holdings as of Sept. 30, 2006, showed that bonds backed by subprime mortgages reached as high as 25 percent of the portfolio in 2005.