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Stock Strategist

Insights from Bill Miller

Our meeting with Miller gave us the opportunity to compare investing ideas.

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One of the features of our StockInvestor newsletter is that I routinely publish detailed notes from our visits with management teams and fund managers that are of interest. Late last year, I and several other Morningstar analysts had the pleasure of spending an afternoon with Bill Miller, manager of several of  Legg Mason's (LM) mutual funds, including the flagship Legg Mason Value Trust. Value Trust is, of course, most famous for beating the S&P 500's return for 15 years in a row (a streak that ended in 2006).

Though the streak is extremely impressive, it is worth noting that it is a fluke of statistics. If you look at any other trailing 12-month period other than December-end to December-end, the streak would have been broken long before 2006. Only 72% of the time has the fund beaten the S&P on a rolling trailing 12-month basis, so it's just highly coincidental that the periods of outperformance fell where they did. Like the baseball player who has the uncanny ability to hit a hot streak in October during the playoffs, one might call Miller "Mr. December."

Paul Larson has a position in the following securities mentioned above: BRK.B, DELL, EBAY, MA, MSFT. Find out about Morningstar’s editorial policies.

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