Bill Miller is Hardly Psyched

Is Bill Miller pumped over the deal to buy Yahoo! today?

It probably beats a stick in the eye, but roughly half of his gain in Value Trust’s Yahoo! position will be wiped out with the declines today in Google and Amazon.com, given that they are larger positions. He will likely lead his peers in his style box, but the shot in the arm is small potatoes compared to the money he has lost in Countrywide Financial, Sears Holdings or various homebuilders over the past six months.

Miller’s shareholder letter will likely be released next week; perhaps he will put it out at midnight in an attempt to bury it. But there is no hiding from his performance; the month of January was more of the same as he flirted with the bottom decile, against his peers, once again.

Legg Mason was adding to their Yahoo! stake last fall, but this windfall might not be enough to dissipate the clouds hanging above the firm’s Baltimore headquarters. Miller’s bad run might be running its course; how much lower can Eastman Kodak or Citigroup go? But his portfolio has been a disaster, and it would take a few more takeouts of his top 25 to move the needle enough to inspire his funds holders.

And if he trims to Yahoo! position into strength he better not spend it; the cash can be used to meet redemption requests. The deal for Yahoo! does not mean Miller is a genius, but will take another problem off his sheets.

The media created a monster in Miller, but he turned out to be merely mortal.

Sitting down to write his annual shareholder letter might be a time for him to reflect on the error of his recent ways.  I am pulling for him to turn around the numbers, but fear that his adoring public will shun him in his twilight years.

Does the fire still burn in his belly?

Bill Miller can retire to his yacht, but Value Trust’s shareholders. particularly those who were late to the party, probably feel like they are underwater, given that Miller has not made them a dime over the past three years.

And the goodwill Miller built up prior to 2003 is rapidly running out.

Yes, Dealbook, there is a story here. But it ain’t the one you wrote.

A Big Winner in Microsoft’s Yahoo Bid
Dealbook
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