If the bearing buddy has been pumped too full of grease, it can blow the soft seal out of the back side of the hub, allowing all grease to escape and allowing easy access for water. Really bad. 

No matter what caused it, you have bad bearings. Changing them is not much fun. I've done it, which is why I prefer to hire someone else to do it. You can get a new set of bearings and races at West Marine or at auto parts places. Just make sure they're the right size for your axle. It doesn't matter that Performance isn't around any more, since you would not buy replacement bearings from the manufacturer anyway. 

Hope this helps. In the future, stop every now and then and (carefully) feel the wheel hubs. They should be pretty cool. If they're hot, you have trouble brewing. If they're almost smoking, you'll burn your fingers. 

