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Mitsubishi UFJ Financial Group, Inc. Message Board

  • bluecheese4u bluecheese4u Nov 2, 2007 1:51 PM Flag

    Bill Miller ~ consumer & financial shares, will have the greatest gains over 5 years

    Bill Miller ~ consumer & financial shares, will have the greatest gains over 5 years

    Bill Miller Says Consumer, Finance Stocks to Rebound (Update1)

    By Sree Vidya Bhaktavatsalam

    Nov. 2 (Bloomberg) -- Bill Miller, whose Legg Mason Value Trust is trailing its benchmark for the second straight year, said stocks that investors are shunning, such as consumer and financial shares, will have the greatest gains over five years.

    ``The new leadership will be U.S., large-cap, dollar-based, and grow to encompass what no one wants to own today,'' Miller wrote in a letter to shareholders that Baltimore-based Legg Mason Inc. sent today by e-mail.

    Miller, 57, shot to prominence after beating the Standard & Poor's 500 Index for a record 15 years, a streak that ended in 2006. His $19.2 billion fund has climbed 0.6 percent this year, trailing the index by 7 percentage points. Investors pulled $9.6 billion from Legg Mason's equity portfolios in the third quarter as funds including Miller's have lagged behind their peers.

    Value Trust has 15 percent of its assets in finance stocks and 27 percent in consumer-discretionary shares. JPMorgan Chase & Co. is Miller's sixth-largest holding and Citigroup Inc. is 15th. JPMorgan's stock has fallen 11 percent this year, and Citigroup is down 33 percent.

    Defaults of U.S. subprime loans have triggered billions of dollars in losses for investment banks including Merrill Lynch & Co. and Citigroup. The AMEX Securities Broker/Dealer Index has slumped 10 percent this year. Retailers such as Sears Holdings Corp., Value Trust's 11th-biggest investment, are getting hurt by falling home prices. Sears shares have slumped 23 percent this year.

    ``Today fear dominates the pricing of housing stocks, of mortgage-related securities, of financials and of many consumer stocks,'' Miller said.

    Less Concentrated

    In September, Miller said he would buy more shares of large U.S. companies because they were cheaper than the rest of the market. In today's letter, he said he would reduce the weightings of many of the fund's top 10 holdings to increase diversity and free up money for new positions he didn't name.

    ``We will still be quite concentrated compared to the average mutual fund, just less than we have been previously,'' he said.

    Legg Mason Value Trust owned shares of about 45 companies at the end of September, about half the number in a typical U.S. fund, according to data tracked by Morningstar Inc. in Chicago.

    Value Trust's top holding is online retailer Inc., whose shares have more than doubled this year. The second- biggest position is power producer AES Corp., down 4 percent.

    The fund has been dragged down by housing-related stocks, which Miller started buying 18 months ago. He put money in mortgage lender Countrywide Financial Corp. and builders Pulte Homes Inc., KB Home and Centex Corp. Countrywide's shares have declined 66 percent this year. Pulte has dropped 57 percent, KB Home has tumbled 50 percent and Centex has fallen 58 percent.

    Miller wrote in today's letter that he values Countrywide's stock at more than $40 a share, compared with its price of about $15 on New York Stock Exchange composite trading today.

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