Journal’s Legg Mason “Get”

The Journal scores an interview with Legg Mason’s Bill Miller, a legendary investor who’s run into a brick wall in the financial crisis, and pulls off a nice profile.

Here’s the old Miller:

Fueled by winning bets on stocks other investors feared, Mr. Miller’s Legg Mason Value Trust outperformed the broad market every year from 1991 to 2005. It’s a streak no other fund manager has come close to matching.

And the new:

A year ago, his Value Trust fund had $16.5 billion under management. Now, after losses and redemptions, it has assets of $4.3 billion, according to Morningstar Inc. Value Trust’s investors have lost 58% of their money over the past year, 20 percentage points worse than the decline on the Standard & Poor’s 500 stock index.

These losses have wiped away Value Trust’s years of market-beating performance. The fund is now among the worst-performing in its class for the last one-, three-, five- and 10-year periods, according to Morningstar.

The paper chronicles Miller’s bad bets over the last couple of years, including Fannie and Freddie, Wachovia, Bear Stearns, Washington Mutual, homebuilders, AIG. Did he pick every bad stock in the market?

The story’s also nice at explaining how contrarian philosophy led him off the rails.

“Bill said, ‘What matters is how much you make when you’re right. If you’re wrong nine times out of 10 and your stocks go to zero — but the tenth one goes up 20 times — you’ll be just fine,’ ” Mr. Davis recalls. “I just can’t live like that.”

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.