Short Bill Miller

I have a lot of respect for the work Mr. Miller put into the industry, over the years. However, like old baseball players or one legged track stars, it’s time for him to retire.

He has done an abysmal job with his assets under management, as of late. But, at the same time, he has done a splendid job driving Legg Mason, Inc. [[LM]] into the dirt, without a pine box.

We all know the headlines:

Bill Miller fired by Mass Pension

Bill ups his stake in Freddie Mac, despite looming disaster.

And, my favorite, Bill says “it’s a tough market.”

So where am I going with this, you query?

Bill’s funds are all down nearly 30% or more in some cases, year to date. In this business, your track record means nothing. You are only as good as your last trade.

I can almost promise, Legg Mason will see its assets under management shrink drastically, as pension funds reevaluate their options, with regards to egregious money management.

In short, the entire Legg Mason Family of funds is down more than 24%, year to date. This is a disaster.

Here are some of their top holdings:

Amazon.com, Inc. [[AMZN]] – 6.6%

The AES Corporation [[AES]] – 4.8%

Aetna Inc. [[AET]] – 2.6%

Yahoo! Inc. [[YHOO]] – 2.6%

eBay Inc. [[EBAY]] – 2.5%

Google Inc. [[GOOG]] – 2%

JPMorgan Chase & Co. [[JPM]] – 2%

UnitedHealth Group Inc. [[UNH]] – 2%

Eastman Kodak Company [[EK]] – 2%

Citigroup Inc. [[C]] – 1.9%

Other holdings include:

[[FRE]], Sears Holdings Corporation [[SHLD]] , Hewlett-Packard Company [[HPQ]] , International Business Machines Corp. [[IBM]] , Time Warner Inc. [[TWX]] , Electronic Arts Inc. [[ERTS]] , Qwest Communications International Inc. [[Q]] , General Electric Company [[GE]] , Nokia Corporation (ADR) [[NOK]] , Level 3 Communications, Inc. [[LVLT]] , NII Holdings, Inc. [[NIHD]], American International Group, Inc. [[AIG]] , Merrill Lynch & Co., Inc. [[MER]] , Capital One Financial Corp. [[COF]] , J.C. Penney Company, Inc. [[JCP]] , Cisco Systems, Inc. [[CSCO]] , Texas Industries, Inc. [[TXI]] , Bank of America Corporation [[BAC]] and Amgen, Inc. [[AMGN]] .

It’s worth noting, Bill has HUGE bets on both AMZN and AES. Coincidentally, I regularly spit on AMZN. Should AMZN drop, it’s lights out for Legg Mason, Inc. [[LM]] .

Conclusion: My top short idea is LM.

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Boy did I miss it.

During the two weeks that inflation was dead or “morte,” I didn’t know what to do with myself. All of these years, I have convinced myself into believing stark craven criminals were controlling the price of crude and other commodities. With this in mind, I knew oil would manage to gap higher and deball century old industries with great vigor, on a regular basis.

Seeing crude up $4 this morning comforts me.

See, I can deal with the evil that I know is there. It’s the people who go out and buy Bank of America Corporation [[BAC]] or Lehman Brothers Holdings Inc. [[LEH]] on the pending liquidation of Fannie Mae [[FNM]] that scares me.

salesforce.com, inc. [[CRM]] is getting its head split in half. I never understood why those losers got to enjoy such a high multiple.

With regards to oil: just buy one, you retarded ape licker.

I like National-Oilwell Varco, Inc. [[NOV]] , Transocean Inc. [[RIG]] and Arena Resources, Inc. [[ARD]] .

Also, with the dollar breaking lower, go get some Yamana Gold Inc. (USA) [[AUY]] , Potash Corp./Saskatchewan (USA) [[POT]] and [[DGP]] .

All of my bank shorts are working. If I had to bank on one bank short, I’d say go with Pzena Investment Management, Inc. [[PZN]] . But, if you can’t do that, without a doubt, bet against Bill Miller via selling short Legg Mason, Inc. [[LM]] .

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Yen at two week highs versus “King Dollar.”

Watch [[FXY]] for proof. And, apparently, [[DGP]] isn’t dead. What do you know?

Developing…

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They just cut the share price estimate and now predict a loss of more than $3.00 per share, as opposed to their estimate of a loss of .41.

So much for that 3rd quarter bank rally that Guy Adami was counting on, talking about “mark ups” and egregious stuff like that.

Someone get me a guillotine.

Developing…

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[youtube:http://ru.youtube.com/watch?v=v5uDY3ItoLs 450 300]

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Coked out money managers and piker retail investors dove head first into banks today, on the thesis that the Government always makes things better. There was no fundamental reason to get long, with oil higher and Fannie Mae [[FNM]] /Freddie Mac [[FRE]] on the cusp of disaster.

In my opinion, this is the worst type of moral hazard:

Through innovative and historic measures, taken by the Fed and Treasury, they (Gov’t cheese makers) have morphed Wall Streeters into upright walking pigs, always willing to take a stab at socialism.

This, as you can understand, is not how free markets work.

With the credit crisis in full blown mode here, I wouldn’t touch the banks, unless of course I was managing money for the Iranian Sovereign Wealth Fund.

Eventually, as predicted by many, the cheese makers will run out of dairy, unable to make new cheese. Then, and only then, will the market be able to correct itself and eliminate the weak/corrupted players.

For the day, my losses were minimal, as long positions in National-Oilwell Varco, Inc. [[NOV]] , Barnes & Noble, Inc. [[BKS]] , Clean Energy Fuels Corp. [[CLNE]] and Wachovia Corporation [[WB]] , amongst 90% of my financial shorts, buoyed me.

In addition, I have built a small cash position of 5%, which will be used to buy [[FXP]] under $85 or [[SKF]] under $125.

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I am so tired of Cramer’s endless rants. See, what you know about Cramer is that he is a flip-flopper. What most of you cannot fathom is his ability to manage money, in a responsible manner.

But, you’re wrong.

There are two types of investors.

One: The guy, like Einhorn, Ackman or Buffett, who sticks to a thesis and doesn’t waiver, unless proven wrong.

Two: The guy, like Cramer and everyone on realmoney.com, who trades based upon the wind patterns of Wall Street.

The problem: Cramer style is terrible for the unwashed folk watching his show/reading his blog, especially those who have an investment time frame of more than 3 days. Because he is constantly changing his mind, he appears to never make any sense. When in fact, his nonsensical advice is perfectly sensible to someone who trades like a degenerate OTB guy.

I digress.

China’s stock market is down more than 50%, year to date. I am here to remind you that markets do not go straight up, after killing so many people. There is so much overhead resistance, littered with people trying to salvage their life savings, it will take years for the Shanghai to recover, sort of like Nasdaq 5,000.

On this faux hype, I want to go short China, via [[FXP]] or outright positions in China Life Insurance Company Ltd. (ADR) [[LFC]] , China Mobile Ltd. (ADR) [[CHL]] or [[CEA]] .

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I bought 2,000 National-Oilwell Varco, Inc. [[NOV]] @ $72.22.

Disclaimer: If you buy NOV because of this post, your dog will relieve himself on your bed. And, you may lose money.

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I sold short 10,000 shares of Legg Mason, Inc. [[LM]] @ $39.85.

Disclaimer: If you sell short LM because of this post, your wife will demand that you get a vasectomy. And, you may lose money.

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Aside from the bag holders of Fannie Mae [[FNM]] /Freddie Mac [[FRE]] /SLM Corporation [[SLM]] common, which I highlighted the other day, there are a ton of banks out there who are long preferred stock too, albeit on a much smaller scale than the retards at Legg Mason, Inc. [[LM]] .

Nonetheless, should FNM/FRE get taken out and shot, expect there to be lots of write downs, as erroneous banks see their investment dollars burn to a cinder. On the balance sheets, where it says “cash equivalents,” expect to see reductions in that number, across the banking spectrum.

At the present, I am trying to research who owns this stuff. However, as you can imagine, it’s rather difficult to ascertain. I know Corus Bankshares, Inc. [[CORS]] has exposure. But, the more I think about it, Pzena Investment Management, Inc. [[PZN]] keeps coming up as a “massive loser” amidst all of the noise—owning nearly 400 million dollars worth of FNM/FRE.

Unfortunately, there is never any stock to borrow.

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