Bill Miller Again Lags the S&P -- and Himself

It's nearly halfway through 2007, and legendary investor Bill Miller is already falling behind Wall Street -- for the second year in a row.

If this goes on much longer, you won't be surprised to see investors in his $11.5 billion Legg Mason (LMVTX Quote)Value Trust (LMVTX) start to feel aggrieved.

The kicker is that Miller isn't just underperforming the S&P 500.

He's also underperforming ... Bill Miller.

Miller, of course, is best known for his 15-year streak beating Wall Street while at the helm of his Value Trust. That was the longest such streak in the mutual fund business until he finally fell behind the eight ball last year.

Profit in 2006: 5.85% -- way behind the 15.5% produced by the broad-based Vanguard (VTSMX Quote)Total Stock Market Index Fund (VTSMX).

OK, so Miller had a mediocre year. And yes, he's off to a dull start for 2007. After nearly five months, his fund is up just 7.6% -- compared with 8.5% for the market overall. But while his bigger fund is starting to turn in dull results, Miller is also running a much smaller fund for clients of white-shoe brokerage Smith Barney.

And the Legg Mason (LMOPX Quote)Value Trust Opportunity Prime Trust (LMOPX), which you can only buy through Smith Barney, is shooting out the lights.

In this more flexible fund, Miller was able to produce a 13.4% return in 2006. OK, so that wasn't quite as good as the overall market. It was nonetheless twice as good as the return over at Value Trust.

This year the gap remains huge. Sure, Value Trust is lumbering along with a return of about 7.6%. Opportunity Trust? Try 15.2%. In less than six months.