Here's a dose of good news for tech fans: Venerable value manager Bill Miller is putting his shareholders' money where his mouth is: distressed tech and telecom stocks.

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In comments at a New York conference and in a letter to shareholders of his

(LMVTX) - Get Report

Legg Mason Value Trust fund, Miller -- the only manager to beat the

S&P 500

in each of the past 10 years -- said he was starting to nibble at shares of battered tech firms. On Friday, Legg Mason filed a portfolio report to institutional owners of his younger and more concentrated

(LMOPX) - Get Report

Legg Mason Opportunity Trust with regulators. Miller's first-quarter trades in the fund's portfolio underscore his growing tech appetite.

While Miller isn't infallible, his record running the Legg Mason Value fund earned him


Manager of the Decade honor for the 1990s. His rising interest in tech companies is an "E.F. Hutton moment" in the fund world, given his skill at picking winners such as

AOL Time Warner


long before it seemed like an Internet survivor.

In many ways the mid-cap blend Opportunity fund, launched at the end of 1999, may be a clearer indication of Miller's current taste than his moves within the large-cap Value Trust fund, which he's run since its 1982 inception. Unlike that larger, older portfolio, the Opportunity fund has more flexibility and fewer imbedded capital gains, which can lead to less trading as a manager seeks to avoid triggering capital gains for shareholders.

Just as he did in his Value Trust portfolio, Miller added

Level 3 Communications


in the first quarter. But he didn't stop there, adding shares of PC maker

Dell Computer

(DELL) - Get Report

, Web-hosting shop

Exodus Communications


and wireless concern

Nextel Communications


, among others.

The report doesn't include a letter from Miller, but in his comments last week the manager said that investors might be too bearish on technology at this point, ignoring a boost in corporate earnings late this year or early in 2002.

"One of the most powerful sources of mispricing is the tendency to overweight or overemphasize current conditions. A year ago investors were unduly optimistic because the economy was strong and corporate profits were growing at double-digit rates while inflation was low," he wrote to shareholders of his Value Trust fund. "

Now it is not a secret that technology investment spending is under severe pressure and that the sector suffers from short-term inventory and intermediate-term capacity problems. These difficulties are well publicized and well discounted in the market."

On March 31, tech stocks comprised some 28.5% of the Opportunity Trust's portfolio, compared with 18.6% for its average peer, according to Morningstar. It's interesting to note that Miller's buying in the tech sector in the first quarter puts him opposite

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Fidelity Magellan manager

Bob Stansky and growth-fund specialists at

Janus, who lightened their tech loads in recent months.

While Miller's Opportunity fund hasn't been around long, it has performed well. The fund's 16.4% gain over the past 12 months tops nearly three-quarters of its peers and leads the S&P 500 by more than 22 percentage points, according to Morningstar.

Fund Junkie runs every Monday and Wednesday, as well as occasional dispatches. Ian McDonald writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to, but he cannot give specific financial advice.