Further Gains
When the financial crisis hit in 2008, Miller was caught holding too many financial stocks. As the S&P 500 plunged 38 percent, his Legg Mason Capital Value Trust fund fell 55 percent while the Opportunity Trust lost 65 percent. Investors fled and in 2012 he stepped down from running Capital Value, the bigger of the two funds he managed.
The past few years have brought him a measure of vindication that the process -- looking for stocks the market has misjudged -- still works. His $2.5 billion Opportunity Trust returned 37 percent annually for the past three years, making it the top performer among diversified U.S. equity funds. And he remains upbeat about the prospects for further gains.
Yet it hasn’t been all smooth. Last year he gained 10 percent while the S&P rose 14 percent. And his Opportunity Trust still trails 96 percent of peers over 10 years and 93 percent over 15, according to Russel Kinnel, director of mutual fund research at Morningstar.
“Bill Miller is a smart, aggressive investor,” Kinnel said. “I’m just not sure he always gets sufficient reward for the risks he takes.”
Lost Sleep
In interviews, Miller has said the financial crisis caused him to lose sleep and gain 40 pounds as he wrestled with the consequences of losing so much of his investors’ cash.
“It had to affect him,” said Ken Leech, chief investment officer at Legg Mason’s bond unit, Western Asset Management, and a longtime investor in Miller’s funds. “He went from being a rock star to last place. But he stuck it out and hung in there.”
In the three decades that Miller oversaw the Capital Value Trust, it returned 12.8 percent a year, compared with 11.5 percent for the S&P 500. His Opportunity Trust fund has gained 6.3 percent against the S&P’s 4.2 percent from 1999 to 2015.
Miller has always stuck to his investment decisions regardless of popular sentiment, said Raymond ‘Chip’ Mason, the Legg Mason Inc. founder who hired Miller in 1982.