QCOM, GE, WFC, JPM Among Top 15 Picks of Bill Miller's Legg Mason Global Asset Management

AES,AMZN, AXP, C, CSCO, EBAY, EMC, GE, IBM, JPM, MSFT, QCOM, TWX, TXN, WFC

Legg Mason Global Asset Management is one of the largest asset management firms in the world. Assets under management as of December 31, 2010 were $672 Billion (11th largest asset manager in the world). 50% of these assets invested in fixed income securities and most of these (70%) are in the Americas Division. Legg Mason Capital Management is one of its subsidiaries. It was founded in 1982, based in Baltimore. It specializes in long-term, valuation based equity management. Bill Miller is chairman and CIO of Legg Mason Capital Management. He graduated from Washington and Lee University with a degree in economics. Before joining Legg Mason in 1981, he served as treasurer of the J.E. Baker Company. Before the subprime crisis, he was one of the most famous and successful investment managers in the world. He was named by Money Magazine as “The Greatest Money Manager of the 1990’s”. Between 1990 and 2005 Miller had a phenomenal track record by beating SPY for 15 straight years. However, between 2005 and 2010 he underperformed the SPY except 2009.

Bill Miller is a long term value investor; he says that:

We are value investors because we are persuaded of the logic of buying shares of businesses when others want to sell them, and we understand that lower prices today mean higher future rates of return, and high prices today mean lower future rates of return.

...One hundred percent of a company's information reflects its past while 100 percent of its value reflects its future.

In a recent interview, Miller said, "I would look for a long- term orientation, and the evidence for that would be a relatively low portfolio turnover. In a world of 110% to 115% turnover, something in the 50% range or less — ideally in the 20% to 30% range — is what would make sense." During the last 5 quarters, he had owned 490 different stocks and half of them are long term investments. 368 of those are still in the portfolio at the end of December 2010. As he suggested, he has a low turnover rate.

He thinks that the US economy is stronger compared to both developed and emerging economies and he is extremely bullish about the US stock market. In mid November, Bill Miller said that US stocks may rise 15% in the next 12 months because of the actions of the Fed. Since then, SPY returned 11.2%.

His 15 largest positions and 15 largest long-term picks are the same. When he invests large amounts in a stock, it is probably a long term investment. Miller had $13.4 Billion invested in US equity. Below are Miller’s 15 largest long term investments at the end of December 2010:

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