Bill Miller Puts on His Marketing Hat

Money Managers that get on a roll often look at clients as a bit of a nuisance. Who needs them when another is ready to take their place? Of course, when times are tough, their accessibility increases dramatically. Face time? Yeah, they can do that.

Bill Miller had his butt kissed for many years in a fashion certain to make even top-quartile managers jealous. But now the worm has turned, and Miller is burning through much of the goodwill he earned years ago. He has gone on the offensive, launching a media blitz/marketing roadshow that is designed to explain Miller's stance and hopefully slow the outflows of assets in his and other Legg Mason mutual funds.

The latest Sunday edition of the New York Times published an article on Miller; clients looking for answers had to settle for a bit of a puff piece chronicling a few of his losing positions, but there was little meat on the bone for Miller's clients who need to decide if they can take any more pain:

As to the causes of his setbacks, Mr. Miller denies that the quality of research or the size of the assets overseen has been the problem, and notes that a number of large funds have done well. Mr. Miller says he is cautiously optimistic that better days are ahead. But his resolve will continue to be tested, especially over the next year.

“I am often asked, how long do we have to wait before the fund starts to do better? The real answer here is the same as it is about most such forecasts: no one knows,” Mr. Miller said in an April 23 letter to his shareholders.

“For planning purposes, here is my forecast,” he wrote. “I think we will do better from here on, and that by far the worst is behind us.”

Miller's travails are familiar to any manager who has trailed his benchmark, and so is the response. Miller is pulling out all the stops.

The series of Miller interviews over the past week is unprecedented, but understandable. Legg Mason is desperate to hold on to the assets; Value Trust’s assets are down roughly 40% in the last year, and it is time to trot out Bill in an attempt to stem the bleeding. But even if he turns around his near-term performance the 3 to-5 year numbers will be slow to respond, and net redemptions are likely to remain the order of the day in Baltimore.

It is unfortunate it took a debacle to get Miller to come out to play; he comes across very well, and you certainly want to like him. And while his research seems intensive, it would appear that his “edge” comes from his valuation methodology, which led him to buy financial stocks a bit too early last year.

Money talks and bullshit walks. Miller trailed the market again Monday, which is surprising given energy stocks lagged and he owns little, if any. It was a day tailor made for him to shine, yet he was 69th percentile against his peers. Of course, that is a good day for him given how much time he has spent in the bottom decile recently.

Morningstar is running a series of interviews with Miller, but what investors really want to see are top decile numbers. Will the markets complexion change in time to save him? I hope so, but hope is not an investable thesis.

Check out the video while we wait for the market to issue him another report card at 4PM EST.
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Update: 98th percentile today, 98th one week, 99th 3-month and year to date, 100th one and three year, 99th 5-year.

35th 10-year, but many clients have not be in for the long haul. Bill needs this market to sector rotate and come back to him. Big time.
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