Are Investors Getting Tired Of Bill Miller's Permabullishness?

Is Bill Miller headed for retirement? Today's action in Legg Mason stock, which was down 10%, the most since May 2009, sure indicates investors may have had enough of the permabullish, pro-cyclical portfolio manager. The reason for the dramatic drop in stock price: accelerating outflows. From the press release filed earlier:

  • Total outflows were approximately $33 billion for the quarter ended December 31. Fixed income, equity and liquidity outflows were $24 billion, $4 billion and $5 billion, respectively.
  • At December 31, 2009, fixed income represented 54% of total AUM, equity 25% and liquidity 21%.
  • AUM for U.S. domiciled clients was 65% of total AUM and, for non-US clients, 35%. By business division, 69% of AUM was in the Americas Division and 31% of AUM was in the International Division.
  • Average AUM during the quarter was $693.3 billion as compared to $684.0 billion in the second quarter of fiscal 2010 and $745.1 billion in the third quarter of fiscal 2009.

The bad news cherry came from the conference call, during which CEO Mark Fetting disclosed that "one client pulled $5 billion from an enhanced-cash fund."

And, of course, where this is pain to be had, one can usually find Nelson Peltz having recently gotten involved: the "activist" investor " last year raised his stake in the firm to become the largest shareholder with about 6 percent and was named a director in October." We fully expect LM's fate to follow that other Peltz "turnaround special"  Chemtura... which was a total loss to Trian.

Yet there was no definitive explanation for the acceleration in outflows:

“We’ve got work to do on the outflows,” Fetting said today in an interview. “We are cognizant of the fact that it takes some time for flows to follow performance and we are working hard in conjunction with our distribution teams to position ourselves to capture assets,” he said.

And the same traditional permabullish approach to negative events:

“In the next couple of quarters, there’s a very good chance of swinging into inflows,” Fetting said.

There is also a very good chance the economy implodes. But keep hoping Mr. Fetting; we are certain that Bill Miller's Apple, Amazon, Google trifecta, which gets the Cramer treatment everyday, will keep finding incremental buyers from here to infinity, as soon to be broke prop traders decide to look at the help wanteds on their Kindles.