It has been a bad year for a number of high-profile professional money managers, who have seen their once-stellar reputations for stock picking besmirched by poor peformance. Is Bill Miller, the once-infallible fund manager at Legg Mason Capital Management, the first casualty?
CNBC reported on Thursday morning that Mr. Miller will step down from the Legg Mason Value Trust mutual fund. Dow Jones (via Market Beat) confirms the report with this note from Legg Mason:
"Legg Mason Capital Management (“LMCM”) and Bill Miller announced today that, effective April 30, 2012, Sam Peters will be sole manager of the Legg Mason Capital Management Value Trust and Value Equity strategy as well as Chief Investment Officer for LMCM. Mr. Miller will remain Chairman of LMCM.
"Mr. Miller has managed Value Trust as either a co- or sole portfolio manager since its inception on April 16, 1982. He will continue to manage the Legg Mason Capital Management Opportunity Trust with Assistant Portfolio Manager, Samantha McLemore. Mary Chris Gay will continue to serve as Assistant Portfolio Manager for Value Trust, providing senior research and investment advice. Mr. Peters will continue to co-manage the Legg Mason Capital Management Special Investment Trust and Mid Cap strategy with Albert Grosman."
Mr. Miller was once famous for beating the S&P 500 for 15 straight years -- a remarkable track record given that most money managers fail to beat their benchmark index in any given 12 month period, let alone longer period of time. However, he has been a controversial figure. He took greater risks with his portfolio, and those risks backfired on him when the market turned during the financial crisis. His fund sank an astounding 72 per cent over an 18 month period.
Though the fund has recovered lost ground since then, Mr. Miller's reputation continued to be dragged down by ill-timed bets on companies like Eastman Kodak. He finally abandoned that sinking investment in the third quarter after holding 32 million shares earlier in the year.
Editor's Note: An earlier headline on this blog post suggested that Mr. Miller is leaving Legg Mason. This has since been corrected.