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Investment star Bill Miller revises strategy

October 02, 2007

Legg Mason Inc.'s renowned money manager Bill Miller wants to avoid a new streak - this time on the losing side.

Facing another year of subpar returns, Miller is changing some investments to boost the returns of his record-setting mutual fund that stumbled in 2006 and lags behind its benchmark stock index again this year.

Miller said his team at Legg Mason Capital Management has worked since August to "reposition" the Value Trust, one of the most talked-about funds in the industry.

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Rating: 2.7/5 (13 votes)


Jamllc premium member - 10 years ago
Should be dropped from the list, not a value investor. Miller adds no insight for people who truly follow a value discipline. AMZN does not equal value. Never did. Now buying large caps after missing the obvious a year ago...value investors buy low sell high...Miller is a momentum investor and should be labeled as such..not value. Not saying he is not a good investor, just in the wrong category.
Ccyork - 10 years ago    Report SPAM
a few years ago jim cramer accused bill miller of not being a value investor. mr. miller wrote a very nice letter back to mr. cramer defending his value investor status. the letter can be found in the book "The Warren Buffett Portfolio" by Robert Hagstrom

bill miller is a value investor and a thinker and he is not afraid to admit when he is wrong. part of his portfolio may be invested in stocks that are not traditional value stocks, but you must consider 2 things about such holdings:

1. what did he pay for these stocks? many of these high-fliers were purchased when they were cheap and unloved

2. though his portfolio is concentrated, he believes in diversification, which includes diversification across P/E ratios
Jamllc premium member - 10 years ago
Contrarian....maybe, value definitely not.
Ccyork - 10 years ago    Report SPAM
Jamllc premium member - 10 years ago
old news...13% of portfolio in AMZN & GOOG--Value--Not...I am not saying Bill is not a good investor, but he is not value..no matter what you say, I will not buy into that.
Ccyork - 10 years ago    Report SPAM
Visible - 10 years ago    Report SPAM
A different perspective....

By definition, value investors buy assets for less than they are worth, and sell when they can get paid more than their assets are worth. This process causes value investors to buy early and sell early - just because an asset is undervalued doesn't mean it can't become more undervalued and when it's overvalued, it can become more overvalued.

The above is made more significant in rising markets as value investors typically under-perform benchmarks in rising markets but out-perform in declining markets. The longer holding periods of value investors makes up for temporary under-performances - making the long term performance of value investors generally better than average.

At the end of May, I posted http://www.gurufocus.com/forum/read.php?2,6178,page=1 some reasons why it will be tough for value investors to stay true to their discipline. The current trend is for investors, the media and most importantly INVESTMENT COMPANIES to evaluate performance on a quarterly basis, and on occasion, this causes investors to move money out of under-performing value funds.

There are many different value investing styles - all based on the premise of paying less (price) than what the asset is worth (value).

Bill Miller uses growth - companies he "knows" will grow their earnings sufficiently to make their current price a bargain (this is an approach of a minority of traditional "value" investors because they would say it's too hard to forecast growth in earnings even a few years into the future).

So, it’s my premise that VALUE INVESTORS CAN’T WORK FOR INVESTMENT COMPANIES whose only interest is the return on their capital (obtained by investor fees) not their investors' capital (return on investing).

Bill Miller’s current under-performance has to be causing outflows that are hurting Legg Mason’s fees and I’m sure he is bending to the pressure. They’d rather he match benchmarks all the time than under-perform even in the short term.

I don’t often predict the future (it’s “unknowable”) but I’d say it’s probable Bill will leave Legg Mason at the conclusion of his current contract.

Kfh227 - 10 years ago    Report SPAM
ccyork Wrote:


> a few years ago jim cramer accused bill miller of

> not being a value investor.

Irony at its finest. Just looking at a PE with no other knowledge makes one more of a value investor than Jim Cramer.

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