Bill Miller

Miller Backs Microsoft Buyout Of Yahoo

Bill Miller, the Legg Mason fund manager who controls 5.4 percent of Yahoo, wants to see Microsoft buy the company. Halfway measures–such as a joint venture –don’t interest him.
That would seem to put him squarely in Icahn’s camp. But Miller’s still being coy, saying he’s undecided on how he’ll vote in the proxy fight.

Legg’s Miller undecided on Icahn’s Yahoo slate
[Retuers]

The End of Bill Miller’s Winning Streak Looms

miller_bill_sad.jpgTime may be up for Bill Miller’s Legg Mason Value Trust. The fund is something of a legend for beating the S&P for 15 years running. But this year Legg Mason lags behind, according to the New York Post.

The recent rally has left the S&P 500 up 8.6 percent so far this year. Miller’s fund, on the other hand, is ahead only 2.7 percent thanks to losing bets on companies such as Sprint Nextel and Amazon.
That’s a big gap: to close it would require not only big gains by some of his largest holdings, but also a downturn in the S&P 500 itself – a combination that seems unlikely to happen, especially with only seven weeks left in the year.

Legg Stumbles [New York Post]

Bill Miller: Mad Monkey Money Management

billmilleraugust.jpgThe investment markets are all about what have you done for me lately. Make money for years but fall behind for a couple of quarters, and there will be someone calling for your head and others saying you are a friggin’ muppet who just lucked out in the past. (Fortunately, it works the other way too—you can lead a giant hedge fund over the cliff and still be regarded as brilliant so long as you are making money now.)
Bill Miller beat the S&P for 15 years running but this year is down 10% and way off his pace. So of course people are saying his past performance was just good fortune. More specifically, they are saying that if you had a bunch of monkeys managing money you’d expect at least one would do about as well as Miller.
Wrong, says Paul Kedrosky.

The math is easy: Assuming data independence (i.e., bad years don’t influence managers the following year), then fifteen years of market-beating performance at a 0.5 likelihood per year gives us a probability for Miller’s performance of 0.003%. Darn unlikely, in other words.
But that’s not enough, of course. We need to know how many portfolio managers were running active money back in 1990 when Miller began his beat-down of the S&P. According to data I found elsewhere, there were almost 700 such funds back then (and there are probably twenty times as many now). Given that number of funds, and given the above-mentioned probability, we would expect around 0.02 fund managers to have turned in a Miller-like performance by now given the cohort size from fifteen years ago.
Trouble is, 0.02 of a portfolio manager isn’t a very effective portfolio manager (even if it’s cheaper), so we can reasonably say that Mr. Miller’s performance is highly unlikely, especially if he is really a coin-flipping monkey. Of course, it’s not inconceivable that it happened by chance — and back at the nine-year mark it was perfectly likely — but a 15-year streak would still have been unusual.

[Note: You can read what DealBreaker’s Joe Weisenthal had to say on the subject earlier by clicking here!]

Is Bill Miller a Monkey?
[Infectious Greed]