Bill Miller Claims Fed Wanted Bear Stearns to Fail

Few people have had the temerity to question Bill Miller’s investing acumen, except me.

His numbers have been horrendous. But in a contrarian move, I upgraded him from “awful” to “mediocre” on Tuesday, noting the pile on in the media was about to begin.

Of course he was up 8% Tuesday through Thursday, and had an awesome week despite Monday’s debacle in Bear Stearns. All the blood has gone out of his financial stocks, and he is good to go here.

The Wall Street Journal was bashing him today, pointing out his cluelessness on March 14th, when Bear traded from $60 to $30 as he stood in front of a crowd pitching the stock:

At an investment conference last Friday, legendary stock picker Bill Miller of Legg Mason Inc. was caught off guard by a simple question.

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.

That has got to be a little embarrassing. Those old dudes don’t carry Blackberries I guess:

Regarding the news about Bear at the conference last week, Mr. Miller says, ``I would say I was surprised.’’ However, he notes it isn’t uncommon for stocks to tumble rapidly in his relatively volatile portfolio. Money has flowed out of his $13.3 billion fund in recent months.

``It appears to be the case that the Fed wanted Bear to fail,’’ Mr. Miller says. He is miffed that the Fed didn’t make a $200 billion credit facility available to investment banks until it was too late for Bear. Mr. Miller says the Fed action penalizes long-term value investors like himself who bought the stock last year while creditors ``who loaned them all the money’’ to make bad bets ``get bailed out,’’ he says.

Everyone is noting that Miller owned JP Morgan as well, so the pain was not so great. But he did trail his peers by about 400 basis points on Friday the 14th and the following Monday. So much for that spin.

Miller is one stubborn SOB:

Mr. Miller is sticking to his guns. Legg Mason Capital Management was the largest holder of Countrywide through December, holding about 12 percent of company shares. While the stock was the worst performer for the fund last quarter, down 53 percent, Mr. Miller is betting it is a great buy for Bank of America Corp. in the long run. Mr. Miller was so eager to keep buying the stock, in fact, he petitioned the Office of Thrift Supervision so he could increase the stake to up to 25 percent of shares outstanding. The permission was granted in mid-January, and he increased its holding.

Good luck with that one, Bill. His ROI on the marketing trips will prove to be slight..

I have some sympathy for his comments about Bear, but he is sticking his foot in his mouth every time he opens it.

Good lord, what a mess his portfolio has been. He must have lost well close to a billion dollars in Bear and Countrywide, and I have to wonder about his street smarts. He seems to be relying too much on his valuation skills, and has been a lousy handicapper for over five years now.

Regardless, I am now on Miller’s side, lets see if he can outperform from here.

No more excuses Bill; Just win baby.

Bear is Bill Miller’s latest setback
WSJ

March 18th
Yeah Baby, It’s Miller Time
1440 Wall Street

March 14th
Bear Stearns’ Implosion Crushes Bill Miller
1440 Wall Street

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