Legg Mason Spins the Bill Miller Disaster

For over a year now I have been questioning Bill Miller's judgment; it was a lonely endeavor in 2007, but the inevitable pile on has started:

But despite the dismal returns, Legg Mason's star manager still manages to create headlines as if investors should listen to him. Miller has been among the most outspoken Yahoo investors during Microsoft's three-month attempt to acquire it.

But his comments are beginning to smack of desperation. And it's not clear that increasing Miller's public relations is the right strategy to improve his investor relations. Portfolio

Maybe Bill should take a page from Gordon Crawford's book; his recent comments over Yahoo! are a good example of a prudent man. But Miller is starting to come off as a kook, and perhaps Bill might want to consider zipping his mouth, given he has been appearing clueless and out of touch. His comments on March 14th, just as his position in Bear Stearns picked up momentum to the downside, were classic:

Miller’s comments March 14th
Mr. Miller was speaking at a conference titled ``Credit Cycle-What’s Next?’’ in the auditorium of Deutsche Bank in New York. During a 40-minute session, Mr. Miller along with other experts spoke to more than 200 top-tier Deutsche Bank clients about the markets. In particular, he talked at length about why this is a great time to buy financial stocks - including Bear Stearns.

After the presentation, an audience member raised his hand and asked Mr. Miller if he was aware that Bear was collapsing and its stock was down 15 percent that morning. Mr. Miller looked shocked, according to observers.

And while Miller probably still does not have a Blackberry to punch up quotes while he is on the move, he might want to consider having a PR professional tag along with him, or better yet get back to what made him famous, namely research. But for now, he will have to make do with Legg Mason’s attempts at spin and damage control:

Legg Mason Statement
“Bill Miller is a very smart investor who has been blessed with extended periods of extraordinary performance and has endured extended periods, such as now, where he underperforms,” according to statement from a Legg Mason spokesperson. “He is a classic intrinsic long-term value investor whose strategy has consistently worked best at times of market dislocations, where investment returns in some of the more depressed parts of the market offer the best opportunities over a long-term horizon.”

I wrote off Miller some time back, and have been spending time trying to handicap the chances of making money long Legg Mason’s (LM-NYSE) stock. Much of the news is in the shares, although headline risk will continue to bedevil shareholders in the months ahead. Getting constructive on the stock requires some patience, but I think the easy money has been made on the short side, and am leaning to the long side of the debate.

Miller’s miserable 3 and -5 year performance would have gotten any other mutual fund managers fired, and while his job is secure, he might want to take a little advice from Megan Barnett:

Miller may indeed return to his glory days at some point during his long-term horizon, but until then, he might be best advised to stay out of the spotlight and focus instead on picking better stocks. Quietly.

Amen to that.
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It’s No Longer Miller Time
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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions

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