Bill Miller: Master of Disaster

Today could be a watershed day for Bill Miller of Legg Mason. No, not because the stock of his employer, Legg Mason (LM-NYSE) has skidded to 52-week lows in rather dramatic fashion.

But with Bill's Value Trust mutual fund down 48.06% year-to-date Bill could be on the verge of posting numbers down 50% for 2008, a milestone he would rather not hit.

Yes, the mighty have fallen, and Bill was even fired as a sub-advisor to the the Masters Select Value fund:

Has the master lost his touch?

Legendary value manager Bill Miller of Legg Mason Funds was fired on October 3 as a subadviser to the Masters Select Value and Masters Select Equity funds.

The move comes as a bit of a shock as the funds’ advisory firm Litman/Gregory Advisors is known for doing extensive research on the managers it selects to run its funds. Litman is also known for its patience when a manager’s style is out of favor.

Miller ran Masters Select Equity for more than eight years with famous co-managers Mason Hawkins of Longleaf Partners and Chris Davis of Davis Select Advisers. But with his fund down more than 40% this year thanks to some bad bets on highly leveraged financial stocks such as AIG and Freddie Mac, his long-term record of beating the market has been ruined. So Litman/Gregory replaced him in its roster of star managers with Clyde McGregor who runs Oakmark Global Fund. Business Week

Bill has yet to put his yacht up for sale, although I bet the rates to charter it have become negotiable.

This had been a year to forget for many; Miller’s performance is bad but there is plenty of bad news that will take the spotlight off his numbers.

But Value Trust’s assets have fallen from over $20 billion to somewhere in the neighborhood of $7 billion in a little more than a year; losing sub-advisory relationships like the one with Masters is also clipping his parent company’s top line.

How long can the good folks at Royce Funds put up with this pain? Several of Legg Mason’s money management subsidiaries are soldiering on, but high-profile problems with various managers and money market funds, combined with a brutal market, have taken a toll on the investment community in Baltimore.

This is like a nightmare that won’t end. At least until Morningstar throws in the towel on Bill and his once successful investment methodology.

______________________________________________________________________

Worse than the Orioles---LM one-year chart
________________________________________________________________________

Bill Miller Gets Fired From Masters funds
Business Week
--------------------------------------------------------------------------------------------------------------
The content contained represent 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 Position

Comments:

<< Back to main