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Will Bill Miller Rise from the Ashes?

If you're squeamish, turn away now!


This article first appeared in Kiplinger's.

Talk about a fall from grace.  Legg Mason Value (LMVTX), managed by the once-revered Bill Miller, has performed so poorly the past 2.5 years that Morningstar now gives the fund 1 star, our lowest rating. This year, the fund has lost an atrocious 35% of its value. We took the fund off our Analyst Picks list in 2003 when it was still riding high because its high expense ratio was way too steep even with his record. Still, we've remained positive about Miller and his approach despite the dismal returns since then.

Should it really come as a surprise that Miller, who was once the talk of the investing world because he beat the stock market 15 consecutive calendar years, has hit a rough patch? No. The streak merely masked Miller's bold approach to stock-picking, a strategy that was sure to run out of steam at some point. Not that one would have expected this steep a drop.

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Russel Kinnel does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.