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Market Extra: Legendary investor Bill Miller lays out succession plans

Legendary investor Bill Miller is handing over ownership of Miller Value Partners, the asset management firm he founded in 1999, to his son and has laid out succession plans for two of its funds. 

Miller Income Fund will continue to be managed by Miller Value Partners, while the investment advisory services for Miller Opportunity Trust will shift to Patient Capital Management, according to a statement from Miller Value Partners Tuesday. Patient Capital is majority owned by Samantha McLemore, a portfolio manager of the Miller Opportunity Trust for more than a decade.

Ownership of Miller Value Partners will transfer to Miller’s son Bill Miller IV, who is co-portfolio manager of the Miller Income Fund.

“Having passed my biblically allotted three score and 10 years, it is both prudent and in the best interests of the funds’ shareholders to begin the transition of the funds’ management and the firm’s ownership from me to the next generation of portfolio managers and owners,” said Miller, chief investment officer and chairman of his firm, in the announcement on his succession plans. 

Miller, who famously beat the S&P 500 for 15 straight years through to 2005, was previously a star fund manager at Legg Mason, the investment firm bought by Franklin Templeton in 2020. Miller regained his footing after stumbling during the global financial crisis. His Legg Mason Value Trust lost 55% in 2008, trailing the S&P 500 by 18 percentage points.

His correct calls over his career have included Inc. AMZN, -1.87%, the e-commerce giant whose market value is now around $1.7 trillion, and the legendary investor has also embraced bitcoin

“I don’t think this is a bubble at all in bitcoin, I think this is now the beginning of a mainstreaming of it,” Miller said in an April interview with CNBC. Bitcoin was trading around $45,972 on Tuesday afternoon, more than six times higher than at the beginning of 2020. 

Check out: Famed Investor Bill Miller Is Roaring Back With Amazon, Bitcoin, and GM

Miller Value Partners is now planning to offer an exchange-traded fund

“We look forward to offering an equity-oriented ETF to the marketplace in 2022,” Bill Miller IV said in the firm’s statement Tuesday. “Separating the firm into two components allows Miller Value Partners to concentrate its efforts on offering publicly available investment products to a wide range of investors.”

Both his son and McLemore, who is assuming leadership of Miller Opportunity Trust, are Miller’s longtime co-managers.

“I’ve been extremely fortunate to work with and learn from Bill over the past two decades,” McLemore said in the announcement. “I enjoy every moment working with him on the markets and intend to preserve that relationship as far as the eye can see.”

Shares of Miller Opportunity Trust LMNOX lost about 4% last year, but soared about 39% in 2020 after gaining around 34% in 2019, according to FactSet. Shares of Miller Income Fund LMCLX gained about 22% in 2021 after tumbling about 10% in 2020 and rising about 16% in 2019.

Read: Here’s what legendary investor Bill Miller said in his final investment letter

The elder Miller, who earned a degree in economics from Washington and Lee University in 1972 and subsequently served as a military intelligence officer overseas, has worked in investment management for decades, according to the bio on his firm’s website. Before joining Legg Mason in 1981, he was a treasurer of the JE Baker Company, a major manufacturer of products for the steel and cement industries, the website says.

Miller Value Partners, based in Baltimore, had $3.09 billion of assets under management at the end of November. The firm’s founder will continue to serve as co-portfolio manager of the Miller Income Fund through this year, according to the firm’s statement.

The changes under Miller’s succession plan are pending approval by the funds’ board of trustees and their shareholders, which is expected to be requested this year, Miller Value Partners said. When the transition is completed, the elder Miller will be a minority owner of Miller Value Partners and Patient Capital, and he will serve as senior adviser to the investment teams of each firm.

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