Jan. 30 (Bloomberg) -- David Dreman, the 71-year-old value investor, said he bought more shares of financial institutions after the industry's worst annual performance since 1990 created a ``major opportunity.''

The investor said he increased his stakes in Bank of America Corp. and Wachovia Corp. near the end of 2007. The Standard & Poor's 500 Financials Index tumbled 15 percent in the fourth quarter, giving it a 21 percent loss for the year. Bank of America fell 18 percent and Wachovia lost 24 percent in the final three months of 2007.

``There was panic in the market towards the end of the year and a lot of them went down far too much,'' Dreman, who oversees $20 billion at Dreman Value Management LLC, said during an interview with Bloomberg Television. ``There will be a turn, and this is probably a major opportunity in financials, probably one of the best in the last 15 years.''

The $8.1 billion DWS Dreman High Return Equity fund, which Dreman has managed since 1988, returned 7.8 percent a year during the past decade, putting it in the top 27 percent of similar funds, according to Morningstar Inc. Dreman founded the Jersey City, New Jersey-based firm in 1977.

Dreman called the 61 percent plunge by Washington Mutual Inc., another of his holdings, during the fourth quarter ``an enormous overreaction.'' The biggest U.S. savings and loan is ``not going to go out of business,'' and may be an acquisition target, he said.

He isn't optimistic on the biggest bond insurers, MBIA Inc. and Ambac Financial Group Inc., which the investor said will suffer ``major losses.'' Dreman said he has bet against them ``for quite some time.''

MBIA lost 75 percent on the New York Stock Exchange last year, while Ambac fell 71 percent.

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net

Last Updated: January 30, 2008 13:05 EST