Legg Mason Value Trust

Hits keep coming for Legg Mason

Jim Kim — Thu, 30 Oct 2008 15:03:43 -0400

The credit crunch has been cruel to more than a few money managers. Bill Miller, the head of the Legg Mason Value Trust fund, is at the top of the list. He never gave up on financial stocks, even as they continued to crater. The old value mantras just plain let him down. He kept loading up on agency stocks as they fell--and fell. And that has now forced the fund to pare staff. Bloomberg reports that as many as 50 of 147 employees may be shown the door. Miller's main fund is down about 50 percent this year, and investors have fled. That isn't horrible considering that the market is down about 40 percent. And other funds are certainly hurting. Fidelity may lay of 400. Janus is also slashing. The Bloomberg article says Miller is reviewing his investment style. "Reviewing"? If he doesn't tinker, something's wrong.

For more:
- here's the Bloomberg article
- here's a Boston Globe article on Fidelity

Bill Miller bets on Freddie Mac

Jim Kim — Wed, 13 Aug 2008 08:14:08 -0400

It's fair to say that the financial crisis has been unkind to a lot of value-oriented fund managers. The mindset--by on valuation dips--has proved to be a loser's strategy. Anyone buying on the likes of Bear Stearns, Merrill Lynch and Lehman Brothers on the way down took some big hits. Miller was long on a whole lot of financial stocks, including Citigroup and Countrywide. At one point the Legg Mason Value Trust fund was down a whopping 40 percent. So what's the answer? How can he start a new 15-year streak? In true value fashion, Miller is loading up on Freddie Mac. Fortune reports his fund owns 80 million shares (12 percent of the total). That's up from 15 million shares at the end of last year. Some might call this desperation. We'll see.

For more:
- here's the Fortune article

Bill Miller faces an uncertain future

Jim Kim — Mon, 04 Aug 2008 17:09:04 -0400

Bill Miller is not the only value manager that has been hit hard by some ill-timed bets on financial stocks. Does it call the whole value approach into question? Miller raises the issue in a letter to investors, noting a group of fund managers talking about "how valuation appeared not to matter and had not for the past couple of years, how it was all about momentum and trend, and how we were all losing clients and assets over and above our losses in the market." Well, these are extraordinary times. More than a few got suckered in as the likes of Bear Stearns fell below book value. I mean, who knew? But, as Fortune notes, Miller's letter offers no route back to prominence. Investors will likely continue to pull funds. We may be witnessing the end of an era. Is the Legg Mason Value Trust fund the new Magellan Fund?

For more:
- here's the letter via Fortune

Credit crisis crunches Bill Miller

Jim Kim — Wed, 23 Jul 2008 13:35:48 -0400

In the annals of investing, Bill Miller remains a big name. Recall that he beat the S&P 500 for 15 years in a row until last year. In 2007, his Legg Mason Value Trust fund fell nearly 7 percent against a 5 percent gain for the S&P 500. Many thought that was an aberration. But the credit crisis is dashing hopes of a return to historical form, Fortune reports. The Legg Mason Value Trust lost 20 percent in the first quarter; Miller was long on a whole lot of financial stocks, including Citigroup and Countrywide. He told shareholders the worst was over, but clearly he was wrong. As of now, the fund is down a staggering 40 percent. He's hardly alone. Fortune notes several big-name funds--such as Fidelity's Growth and Income fund the Oakmark Select fund--that have gotten tripped up on financial stocks.

For more:
- here's the article

New era for Bill Miller opening up?

Mon, 12 May 2008 06:59:58 -0400

We tend to think of Bill Miller as the guy who manages the $12 billion Legg Mason Value Trust, famous for having beat the S&P 500 for 15 years straight--a streak that ended recently. But as the New York Times points out, he's also chairman of Legg Mason Capital International, which is taking its lumps right now. It had large stakes of Yahoo and Countrywide. But these are the times when talent really shines. Some may think he's lost his touch. Or maybe he was due for a drought. But he's also thinking of shifting strategies in a way that would focus the fund on more stocks, or just a few dozen. He has his team scouring for opportunities, and you get the feeling that if Legg Mason Capital continues to lag, it won't be because of a lack of trying.

For more:
- here's the New York Times article

Bill Miller says worst is over

Mon, 28 Apr 2008 06:59:54 -0400

Bill Miller, the esteemed Legg Mason Value Trust fund manager, has declared the "panic phase" of the credit crunch over, reports MarketWatch. For him, personally, it has been an ugly trial; the Value Trust fund's performance over the past two years says it all (Recall that he beat the S&P 500 for 15 years, a streak that ended in 2006). His mutual fund tanked nearly 20 percent in the first quarter alone. However, he remained optimistic on the crisis. Even as the credit crunch worsened, he stuck with the likes of Citigroup and Countrywide. He thinks the Bear Stearns collapse marks the nadir. The wild card, he tells clients, is commodity prices and inflation. A spike really could create havoc.

For more:
- here's the MarketWatch article