Look who’s back!
Bill Miller, the legendary mutual fund manager, who flushed away a lifetime of outperformance over the last two years, is poking his head out again. Actually, it’s more like the media poked its head into whatever cave Miller’s been hiding in.
Following a surprising six week rally, Bloomberg proclaims that the Legg Mason (LM) manager is “not dead yet” and that good old value stocks are crushing more advanced quant strategies.
The turnaround battering investors who use mathematical models to pick stocks is making heroes out of last year’s worst- performing money managers. Bill Miller, who lost 55 per cent in 2008 running the Legg Mason Value Trust after beating the Standard & Poor’s 500 Index for a record 15 straight years, is topping the measure again. Value investors buy companies that are the cheapest relative to their earnings or assets.
Man Group Plc’s AHL Diversified Futures Ltd., a computerized trading fund, lost 7.1 per cent in net asset value since March 9 after surging 25 per cent last year. In addition to futures on stock indexes, the fund invests in contracts linked to currencies, bonds, commodities and interest rates.
It makes sense that Miller would be doing well right now, since he loaded up on some of the worst garbage on the way down. And it’s the garbage — finance, in large part — that’s been such a strong outperformer. But it seems like kind of a weird strawman to tout his performance vs. market-neutral quants. What does one have to do with the other?
And we need more than a six-week rally to demonstrate that he’s no longer dead or “not dead yet” or whatever. It doesn’t say much if your strategy remains the same at all times, and market gyrations favour your style during a short period. For Biller to actually be revived, he’ll need to start beating the market for a while, enough so that investors will actually want to put their money with him again.
(via Zero Hedge)
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