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Bill Miller Gets Fired From Masters funds

Posted by: Lauren Young on October 7, 2008

This item was written by Lewis Braham, who recently authored a piece on focused funds for BusinessWeek

Has the master lost his touch?

Legendary value manager Bill Miller of Legg Mason Funds was fired on October 3 as a subadviser to the Masters Select Value and Masters Select Equity funds.

The move comes as a bit of a shock as the funds’ advisory firm Litman/Gregory Advisors is known for doing extensive research on the managers it selects to run its funds. Litman is also known for its patience when a manager’s style is out of favor.

Miller ran Masters Select Equity for more than eight years with famous co-managers Mason Hawkins of Longleaf Partners and Chris Davis of Davis Select Advisers. But with his fund down more than 40% this year thanks to some bad bets on highly leveraged financial stocks such as AIG and Freddie Mac, his long-term record of beating the market has been ruined. So Litman/Gregory replaced him in its roster of star managers with Clyde McGregor who runs Oakmark Global Fund.

Interestingly, both Masters Select Funds already have one Oakmark manager, Oakmark Select’s Bill Nygren, whose bet on Washington Mutual also floundered but whose fund has held up better than Miller’s during the slide. According to Litman/Gregory, there should be little overlap between the two Oakmark managers in the funds.

Still, the decision to let Miller go at this juncture seems ill timed. Given that his fund has already fallen so much, he may be due for a comeback. But then the two Masters funds have also lagged the market this year, in part because of Miller’s screw up.

Maybe the pressure to remove him now was too great.

Reader Comments


October 7, 2008 10:44 PM

This is definitely another blow to Bill Miller's reputation and the Legg Mason families of mutual funds. I used to idolize Mr. Miller for his record years of beating the S&P 500, but then until couple years ago, it's pretty much over for Mr. Miller. He should retire now and work on an advisory role instead of running funds like he's doing right now. In this tough market, it's hard to stand agains the current, especially one is not even sure when it's over. Good luck Bill. Team

October 13, 2008 6:44 AM

This blog is really nice and informative. We are pleased to know this blog is really helping people and it’s our pleasure to post informative content on this useful blog created by webmaster.

Here’s our market view on American stock market for 10th October, 2008

The stock market has collapsed - since Sept. 19 the DJIA is down 25% and the S&P 500 is down 28% and down 42% from a year ago.

How can this happen so quickly and so dramatically when so many good things have occurred? Oil is down to $82 a barrel; interest rates are very low; the dollar is up; valuation levels are extremely attractive among many blue chip stocks.

What's the real problem? The problem that is killing the stock market is a lack of hope about the future.

Hope springs from optimism that is based on facts and history. Look at the history of America and really all of mankind. Life is full of setbacks and problems - that's just the deal. But this too shall pass, as all scary periods have.

Doomsayers have been around forever and their batting average is zero. Buying stock is based on hope - hope for the future. If one doesn't have hope, they shouldn't be in this business.

So what is the best service we, as professionals, can provide for our clients?

First, discuss the fact that we are dealing with serious problems but it is not at all like 1929. The Federal Reserve and the Treasury Department are doing many things to restore confidence in the financial system. There is global coordination in attacking the problem, which is lack of confidence.

Tell your clients to look at history of our great nation and what has happened since 1776 when we faced very serious problems. The stock market actually rose steadily about six months after Pearl Harbor and until the end of WWII even though the outcome was not at all clear for several years.

No one knows when the stock market will bottom and a new bull will commence. We do know that stocks and mutual funds offer the best values we have seen since Black Monday, Oct. 19, 1987.

Almost all Americans have hope about the future of our nation, but they need help to control their normal fears. Team
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Joe Grabowski

March 29, 2009 10:23 PM

Dick Weiss from Wells Capital ran the funds to the groud in the last 5 years as well, shouldn't he be fired too?

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