Bill Miller is Back? Hardly.
By Barry Ritholtz - July 8th, 2009, 9:30AM
There has been a lot of recent chatter along the lines of Bill Miller is back in the WSJ, Investor’s Business Daily, Bloomberg, etc.
This turns out to be a simple case of bad mathematical analysis — like declaring Fannie Mae (FNM), AIG or Citibank (C) buy & hold owners were back because they were up 220% — after a 97% collapse.
Be sure to read James Bianco’s brilliantly simple dissection of why this meme is utter nonsense: 8,893 “Bill Millers”.
July 8th, 2009 at 10:30 am
Barron’s does this all the time with mutual fund managers.
XYZ fund was down 43% last year but has enjoyed a 15% gain so far in 2009 and is in the top 25% of peers year to date.
Do people really read this stuff and think, wow, that’s a good manager?
July 8th, 2009 at 10:36 am
champion coin flipper
July 8th, 2009 at 10:44 am
Fade Bill Miller?
July 8th, 2009 at 12:57 pm
I imagine Bill Miller would not say that he is “back.” It’s all media noise.
“He who establishes his argument by noise and command shows that his reason is weak.” ~ Michel de Montaigne
July 8th, 2009 at 4:48 pm
Bill Miller is back. Way back in the pack of also-ran managers. Bye, Bill.
July 8th, 2009 at 6:07 pm
Think the implied conclusion of Bianco’s piece, that none of the 8,893 other managers are providing Alpha to their funds, is somewhat flawed. For one thing, only three periods were covered, for another only a few “celebrated managers” were covered. Do agree that “stuck” is the operative term for too many of them who “stick” to a style or even sector or a holding, like stopped clocks far too long. And also agree with the oft-quoted comment that the average Mutual Fund underperforms the indexes, but one can also drown in a lake whose AVERAGE depth is a few inches. The trick is to find those managers who are able to respond to changes in market behaviour and do well with consistency over longer periods. Personally never use the five or ten year cumulatives due start/end dates can skew significantly, but add the annual results of each fund from ‘02 through ‘07 and YTD, and divide by eight. (Those years, available on Morningstar, include two Bear years.) Here are some results of that exercise for some of Bianco’s as well as for SPY (S&P ETF): Miller’s LMVTX, -2.8 LCORX, 10.2; FCNTX, 5.7; CGMFX, 15.0, and some others I hold but not in the piece: FAIRX, 8.9; RYSEX,7.6, and HRVIX, 8.5. All except Miller’s providing good Alpha over SPY at 0.67%! Finally, did a quick averaging of SOME of the three year records in piece, and even that varied tremendously…Miller’s a -47%, Baron’s a -31, Gabelli a -6.2, Leuthold a -1.8, and Heebner’s CGMFX at +24.5.
Obviously not a fan of the “efficient Market Theory!