Veteran fund manager Bill Miller is leaving Legg Mason (LM) after working for the investment firm for thirty five years.
Miller, the granddaddy of value investing, is also purchasing all of Legg Mason’s interest in LMM LLC, which provides investment management services to Legg Mason Opportunity Trust and Miller Income Opportunity Trust. (Read more, here: The Greatest Investors: Bill Miller.)
Miller reached the height of his career and popularity during the 1990’s running the Legg Mason Capital Management Value Trust, which outperformed the S&P 500 each year from 1991 to 2005, a fifteen year winning streak. His big bets on Amazon (AMZN), Alphabet’s Google (GOOGL) and eBay (EBAY) led him to fame. According to the Wall Street Journal, Miller was named mutual fund manager of the decade in 1999.
But Miller wasn’t immune to the housing and financial crisis of 2007 and 2008. Miller bet wrongly that the financial and housing sectors couldn’t fall more than they already did, but that contrarian call proved to be wrong. Assets in his fund went from $21 billion to $2.8 billion because the fund stayed invested in the likes of Bear Stearns and American International Group (AIG). Bear Stearns failed in 2008. The Value Trust fund fell 55% in 2008, worse than the S&P 500 which dropped 37% in the same period.
Miller gave up the reigns of the Value Trust fund in 2012 but continued to run the Opportunity Trust fund, which he is now purchasing from Legg Mason. “This transaction affirms my ongoing commitment to managing our funds and to our investors. I am excited about the future of LMM, and our team is dedicated to our long-term, value-driven approach and to true active management,” Miller said in a press release announcing the purchase. “I am thankful to Legg Mason for our 35-year relationship and to the many great people I’ve worked with along the way.” LMM separated from Legg Mason in 2013 and had $2.13 billion in assets under management as of March 31. Miller said there would be no change to the investment team at LLM. The Opportunity Trust Fund, which is down 0.66% year-to-date, according Morningstar, invests in stocks, derivatives and other financial instruments that provide the opportunity for long-term growth of capital. Some of the top holdings include Amazon, Quotient Technology (QUOT) and Lennar Corp (LEN).