Bill Miller, manager of the Legg Mason Value Trust, may have made a poor gamble last summer, when he expanded his holdings of Freddie Mac, 14.6 million shares of which he first bought in the fourth quarter of last year, by an additional 30 million shares, The Baltimore Sun reports.


Following the government’s bailout of the Freddie and Fannie Mae, Freddie Mac’s shares plummeted 80% in value. All told, Legg Mason and its affiliates held nearly 80 million of Freddie Mac shares as of July 31, according to Securities and Exchange Commission filings. That translates to 12.4% of Freddie’s common shares, which were worth $652.6 million at that time. Yesterday, those were worth a scant $70 million.


Calls to the company to inquire about present holdings were not returned, so it’s hard to pinpoint how much of a hit it actually took.


Investors in Legg Mason funds have already had their confidence shaken, and they withdrew $18.4 billion from the company’s funds in the second quarter ended June 30.


Other analysts, however, speculate that the two companies’ stock could rally, much as mortgage debt that they guarantee has risen in value on news of the government bailout.

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