Bill Miller Case Study Analysis

Bill Miller

This report will assess the past performance of Bill Miller and his Value Trust Fund. It might appear from Figure One that the Value Trust Fund has outperformed the S&P 500 but not Warren Buffet’s BRK-A.

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Figure One: Comparison of Bill Miller’s Value Trust with S& P 500 and Warren Buffet’s BRK – A.

However in the period from 2006 to 2008 the Value Trust Fund underperformed the S&P 500 as illustrated in Table One.

|Year |Value Trust |S & P Index |Performance of Trust |

|2006 |5.84% |15.80% |-9.96% |

|2007 |-6.61% |5.50% |-12.11% |

|2008 |-55.03% |-37% |-18.03% |

|2009 |38.82% |23.19% |15.63% |

Table One: Performance of the Trust Against the S & P 500 (2006 – 2009)

When the performance of the Trust Fund includes the figures up until and including 2009, the trust fund has shown an average growth of 11.28% while the S& P 500 has an average growth rate of 11.29%. The geometric means have a higher difference with the geometric mean for the Trust Fund being 8.04% and that of the S & P 500 being 9,61%. Although the Legg Mason Fund outperformed the Standard & Poor’s 500-stock index fro 15 years, the fund has performed very poorly over the last four years (Nocera, 2010).

Warren Buffett has noted that many years of superb investment performance can be eliminated in a matter of moments by the poor judgement of an investor (Bui, 2009). In the last 18 months the value of Bill Miller’s investment fund fell 72% (Bui, 2009). Warren...