Legg Mason's (LM) Bill Miller To Manage Another Fund...WTF?
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Bill Miller is the Legg Mason (NYSE: LM) money manager, whose two funds have each lost more than 50% this year, has been asked to help run a third fund as the firm tries to halt record outflows.
Before we get into the minutiae of the fund that Bill Miller will assist in managing, I just wanted to remind potential investors of some of his recent top stock picks. He loaded up shares of Citi (NYSE: C) and Amazon (Nasdaq: AMZN), but where Bill Miller really fell apart is buying shares hand over fist of Countrywide, Yahoo (Nasdaq: YHOO), American International Group (NYSE: AIG) and Freddie Mac (NYSE: FRE).
Not only did Miller buy stocks like Countrywide and Freddie, he doubled down on them, right before the companies were seized by the government. Many questioned as to why a sane man was doing this as it seemed likely the companies would be seized by the government.
After Miller kept buying shares of Fannie and Freddie, Barron's asked StreetInsider's Lon Juricic what he felt about that trade: "Bill Miller is going to look like the smartest guy in the room or the dumbest. The question is will Freddie Mac be around in six months? When they go to raise capital, who's going to be there?" he says. "It's been trading like it's going to $0, and the Treasury hasn't detailed how they would structure any bailout, so there's concern that there's not going to be anything left over in the plan for common shareholders."
Bill Miller didn't listen to common sense and continued to buy Freddie Mac shares right up till the end.
Bill Miller's fund was a large Yahoo shareholder, who agreed with Jerry Yang that Yahoo should hold out for more money. Everyone knows how the Yahoo story has turned out so far.
After reading this, you may wonder why adding Bill Miller to manage a third fund would ease investors fears and reverse withdrawals from Legg Mason funds. Well, that's a good question that I can't answer other than to say he has name recognition. Then again, Bernie Madoff has name recognition, maybe Legg Mason should hire him?
Miller will be added to the Legg Mason Partners All Cap Fund after the new year. Legg Mason is trying different tactics to stem customer redemptions that took $37 billion from its stock funds in the first nine months of 2008. Miller’s Legg Mason Value Trust has declined 56% this year.
Miller's claim to fame is guiding the Legg Mason Value Trust to a better performance than the S&P 500 Index for a record 15 consecutive years, has trailed the benchmark since 2006. His $1.3 billion Legg Mason Opportunity Trust has declined 65% this year.
-J Raznick
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Before we get into the minutiae of the fund that Bill Miller will assist in managing, I just wanted to remind potential investors of some of his recent top stock picks. He loaded up shares of Citi (NYSE: C) and Amazon (Nasdaq: AMZN), but where Bill Miller really fell apart is buying shares hand over fist of Countrywide, Yahoo (Nasdaq: YHOO), American International Group (NYSE: AIG) and Freddie Mac (NYSE: FRE).
Not only did Miller buy stocks like Countrywide and Freddie, he doubled down on them, right before the companies were seized by the government. Many questioned as to why a sane man was doing this as it seemed likely the companies would be seized by the government.
After Miller kept buying shares of Fannie and Freddie, Barron's asked StreetInsider's Lon Juricic what he felt about that trade: "Bill Miller is going to look like the smartest guy in the room or the dumbest. The question is will Freddie Mac be around in six months? When they go to raise capital, who's going to be there?" he says. "It's been trading like it's going to $0, and the Treasury hasn't detailed how they would structure any bailout, so there's concern that there's not going to be anything left over in the plan for common shareholders."
Bill Miller didn't listen to common sense and continued to buy Freddie Mac shares right up till the end.
Bill Miller's fund was a large Yahoo shareholder, who agreed with Jerry Yang that Yahoo should hold out for more money. Everyone knows how the Yahoo story has turned out so far.
After reading this, you may wonder why adding Bill Miller to manage a third fund would ease investors fears and reverse withdrawals from Legg Mason funds. Well, that's a good question that I can't answer other than to say he has name recognition. Then again, Bernie Madoff has name recognition, maybe Legg Mason should hire him?
Miller will be added to the Legg Mason Partners All Cap Fund after the new year. Legg Mason is trying different tactics to stem customer redemptions that took $37 billion from its stock funds in the first nine months of 2008. Miller’s Legg Mason Value Trust has declined 56% this year.
Miller's claim to fame is guiding the Legg Mason Value Trust to a better performance than the S&P 500 Index for a record 15 consecutive years, has trailed the benchmark since 2006. His $1.3 billion Legg Mason Opportunity Trust has declined 65% this year.
-J Raznick
Subscribe to EasyStockAlerts.com & Get real-time e-mail alerts when news hits your stocks!
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