Bill Miller’s 15-year streak of beating the Standard & Poor’s 500 Index is over.
Miller’s $21 billion Legg Mason Value Trust was up 5.1 percent as of Friday, trailing the S&P 500’s 13.6 percent gain.
The mutual fund is the worst performer of 108 “multicap value” funds tracked by Bloom berg that buy stocks managers perceive as being cheap. Miller’s fund, which holds fewer than 45 stocks, was hurt by Amazon.com Inc. and UnitedHealth Group Inc.
“It’s not the right portfolio for 2006,” said Jeff Tjornehoj, a Denver-based analyst at Lipper who tracks the fund industry. “Perhaps it will be the right portfolio for 2007.”
The Legg Mason fund beat the S&P 500 every year since 1991, rising at an average annual rate of 15.8 percent, compared with 11.9 percent for the U.S. stock benchmark. Miller also manages the $6.7 billion Legg Mason Opportunity Trust, which also lagged the S&P 500 last year. Miller, 56, declined to comment.
The 15-year streak has helped Baltimore-based Legg Mason Inc. draw publicity and money from investors. Miller’s fund had $750 million of assets in 1990 and Legg Mason was better known for its regional stock brokerage.
The company now oversees $891 billion after buying Citigroup Inc.’s asset-management unit a year ago in exchange for its brokerage business, making the company the fifth-biggest money manager in the U.S. The company has since been eclipsed by BlackRock Inc., which bought Merrill Lynch & Co.’s mutual-fund division in September for $9.4 billion.
Shares of Legg Mason have declined 20 percent this year because the company was slow to produce promised cost savings from the Citigroup deal, and fund sales decreased.
Miller, who has helped run Legg Mason Value Trust since its inception in 1982, buys shares of companies he considers inexpensive relative to potential earnings growth.
He’s known for picking stocks that are out of favor and holding them for years.
