Did Bill Miller or Legg Mason bribe Barron's for a recent cover story?  Or has Barron's assumed investors cannot understand elementary math?  Given Miller's atrocious performance in recent years followed by positive 2009 performance that still has investors that committed capital to Value Trust in 2007 down considerably, one must wonder how Miller could obtain the Barron's cover story on October 12th entitled "It's Miller Time."

In It's Miller Time, writer Tom Sullivan suggests that investors consider investing in Value Trust given its 38% YTD return which places it in the top 5% of all large blend mutual funds.  According to Sullivan, this performance represents "an amazing about-face from early March, when his fund had lost 72% of its value in a matter of about 18 months."  Is this really an amazing about-face?  Anyone familiar with Miller's investing approach and fund composition tilt towards financials should not be surprised with his performance in 2009.

Miller invested in a number of financial stocks throughout the financial crisis.  To the detriment of his investors, Miller bought every dip and indiscriminately chased every financial stock on the way down, from Countrywide Financial, Washington Mutual, Bear Stearns, Lehman Brothers, Fannie Mae, Citibank, and some other financials that managed to avoid bankruptcy or massive government capital injections.  Miller apparently never saw a stock dip he didn't love and that served him well during the bull market of the 90s and during the last period when the US emerged from a mild recession, but from 2007-2008 this approach devastated his investors.  However, in 2009 financials have rallied the strongest and Miller's exposure to this sector has resulted in improved performance.  The rising tide in 2009 has benefited any fund manager with net long exposure and Miller's portfolio of high beta garbage has benefited by finally outperforming his benchmark, albeit leaving investors that committed capital to Value Trust before October 2008 still needing more positive performance to simply break even.  If one invested in Value Trust in 2007, one would still need nearly a 100% from the current NAV to break even.  Somehow this math was missed by the editors of Barron's who decided Miller was worthy of a cover story.