The Legacy of Bill Miller

Posted on Monday, October 12, 2009

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Quick... predict the Barron's title for a fund manager that has underperformed their benchmark (in this case the S&P 500) by 15% over the last 12 months.

"Tough Times for Bill Miller"
"The Rise and Fall of Biller Miller"
"Bill Miller Loses His Edge"

Nope.... the actual headline? "He's Back".

Lets go to Barron's for the fluff:

The aggressive manager of the Legg Mason Value Trust, whose remarkable run of success preceded a more recent patch of dreadful yearly returns, is again near the top of his peer group in 2009. Through last Thursday, the Value Trust (ticker: LMVTX) was up a whopping 37.52% so far this year, putting it in the fifth percentile (top 5%) of all large blended-fund returns. It's an amazing about-face from early March, when his fund had lost 72% of its value in a matter of about 18 months.

"If you do this long enough, the market has a way of making you look stupid from time to time," says Legg Mason Value Trust manager Bill Miller.

"The shareholders who stuck with us believed in our process and have seen us underperform; it has happened before," Miller told Barron's in a recent interview. At least "we built up large tax-loss carry forwards, which will mean no capital-gains taxes, which may go up."

True, he has underperformed before.... in fact, over the last ten years his fund has underperformed the S&P 500 by more than 17% and is down 23% in absolute terms over that time.