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Bill Miller Gets Fired From Masters funds


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.


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