FUND ALERT

The Kaufmann Fund this week notified customers that its largest holding is Cendant Corp. It marks the first time the $6-billion mutual fund has alerted customers about one of its investments.

Cendant, whose brands include Days Inn hotels and Century 21 Real Estate, said last week that it lowered earnings for the last three years by about $650 million as it cleansed its books of fraudulent accounting. The company’s stock has fallen about 54% since the company announced the accounting problems in April.

In a letter to investors, Kaufmann--which has built a lofty reputation as an aggressive growth fund--said it believes Cendant is a good value because of the recent losses.

Kaufmann has been buying Cendant shares throughout the last few months. The fund holds 12.9 million shares of Cendant, co-portfolio manager Hans Utsch said. It held 9 million Cendant shares in March.

“In light of the recent press coverage concerning the fund’s largest holding, Cendant Corp., and questions about the performance of small-cap stocks, we felt it was important to communicate with our shareholders,” the letter said.