Bill Miller, we are watching

SAN FRANCISCO (MarketWatch) -- Bill Miller, the veteran Legg Mason mutual-fund manager whose remarkable 15-year streak of market-beating performance ended in 2006, says that battered brokerage, housing and consumer stocks are poised to become big winners. And he says he's trimming many of his fund's largest holdings in order to buy more of them.

This recommendation has created a bit of a commotion in certain circles because I and many others believe that there is much more downside to brokerage and housing stocks. Since Legg Mason already has very substantial positions in many of these stocks my question is whether he is really going to expand his position, or whether he wants to unload some of it. Rather than make idle accusations, we should let the facts speak for themselves. This story will take months to unwind, but this is what I have gathered from Yahoo finance so far. I've supplemented the Yahoo data with additional research when Legg Mason did not make the top 10 list of institutional holders. I will look forward to updating this chart when newer information is available.

Ticker	Shares	% ownership	Report Date
CFC	51,587,956	8.96	30-Jun-07
KBH	4,337,015	4.22	30-Jun-07
LEN	2,304,000	1.44	30-Jun-07
TOL	3,587,786	2.29	30-Jun-07
RYK	7,218,698	17.21	30-Jun-07
PHM	30,925,258	12.08	30-Jun-07
DHI	nothing	found	30-Jun-07
BZH	6,708,672	17.16	30-Jun-07
HOV	nothing	found	30-Jun-07
CTX	17,136,660	14.18	30-Jun-07

Financial Responsibility Petition

We continue to move from one mini-crisis to the next in the financial markets, so maybe this will all work out OK. One of my major concerns has been that reforms put in place in the 1930s to ensure the stability of the banking system have steadily eroded. The repeal of Glass-Steagal allowed traditional depository banks (which have direct access to Federal funds) to engage in much more risky financial wizardry. The recent collapse of mortgage lending standards and the resulting housing debacle is a good example of what happens when mega-banks operate without adult supervision.

Anyway, I was involved in helping to draft this on-line petition. I tried to get the author to tone down the rhetoric and eliminate the last two points. The petition is here. http://financialpetition.org/ .

If you take a look at it, please vote in the poll and let me know what you think.

More information about Glass-Steagal is here: http://en.wikipedia.org/wiki/Glass-Steagall_Act.