How quickly the worm turns. For 15 years Legg Mason's Bill Miller topped the S&P 500 while picking stocks for the Value Trust fund. That track record made him one of the mutual fund industry's brightest stars and helped Legg Mason pull in billions of AUM. Now Miller is at the bottom of the three and five year rankings list, looking up.

The fund is now the worst performing tracked by Morningstar in its category, a fact the Wall Street Journal gave play Friday morning in its Deal Journal blog.

That performance is costing Legg Mason greatly. Just a year ago Value Trust had more than $20 billion in assets under management. Twelve months later and the figure is down to $6.8 billion and still falling.

Yet Miller, whose fund is down more than 40 percent so far this year thanks to losing bets on Fannie Mae and Freddie Mac, is still enough of a star to be spending the week in Sun Valley at Herb Allen's annual media summit. The paper guesses that Miller may be getting the first hand gossip on the inner goings of Yahoo, another of his big bets.

While the paper points to mutual fund analysts, such as Morningstar's Greg Carlson, who are telling shareholders to stay patient and "Keep the faith," the big question for Miller will be if Legg Mason CEO Mark Fetting can keep the faith if Miller's fund does not execute a turnaround. Fetting, who is in his first year as CEO, is also facing down angry investors in the firm's bond funds that were whacked by losses in mortgage-backed securities.

It is more than the mortgage crisis that has hit Miller, however. The paper points to a long list of losing stock picks now cluttering Value Trust's portfolio. Those stocks include: Aetna, American International Group, Bear Stearns, Citigroup, Eastman Kodak, Qwest Communications, Sears Holdings, United Healthcare and Yahoo. 

Edited by: Sean Hanna, Editor in Chief


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