Bestinvest says
On 30th April 2012 Bill Miller, longstanding manager of this fund, will be stepping down. Miller has run the fund’s US equivalent, Legg Mason US Value Trust, for 30 years and previously had an outstanding track record, uniquely beating the S&P 500 index for 15 consecutive years from 1991 to 2005. Since then, however, he has spectacularly underperformed and the fund has struggled to develop a team-based investment process. Unless he can dramatically turn around performance, his record will remain tarnished. The incoming manager and new CIO will be Sam Peters. Peters has no identifiable track record as sole manager of an equivalent mandate, so this fund no longer qualifies for a Bestinvest rating.
The fund’s objective is capital growth, principally from investment in large cap US equities. The manager believes this is most consistently achieved through long term ownership of companies purchased at large discounts to their intrinsic value. Ideas are sourced by looking for signs of “expectation gaps” – areas of the market where the pricing mechanism has broken down. These are often found in companies undergoing management or business upheaval or with emerging business models with high uncertainty. The key areas considered in stock analysis are competitive strategy, financial and managerial acumen, and valuation. The manager looks to understand an industry or company to a much greater level than his peers. This often means applying a pragmatic and contrarian approach,that is, buying into emerging stories or buying an unloved stock when others have given up on it. Since 2005 the sole manager approach has evolved into a more collegiate, team-based approach to investing.