.  .  .  .  .

For six straight quarters, money has been pouring out of LM's domestic equity mutual fund, and there have been net outflows in four of the last seven quarters in the whole mutual fund division... that's the redemption song.

Since LM makes money taking a cut of the assets they manage, this is most surely terrible news for them...

.  .  .  .  .

But selling LM isn't our only conclusion here.

It's definitely a big conclusion, especially today, with the stock up for all the wrong reasons... It's up because State Street (STT), a very good firm, is taking care of its sub-prime problems.  But STT is an asset manager, and it's gaining monies, and putting the litigation risk behind it.

I believe that LM is not doing either of those things.  It has a ton of this structured investment vehicle product... it's got a ton of exposure to that...  I know, it made some write downs, but no, that's the last thing we expected from a firm with such a great reputation.

Frankly, we - meaning me - were aghast... We thought we were investing with Tiffany.  It turns out we were shopping in a home shopping cubic zirconium production...

And that's not even mentioning the fact that Citigroup (C*) owns 7% of LM's shares outstanding and Vikram Pandit, the new CEO... he's got to be itching to sell... especially with the stock up so much today.  C* needs the money.  They've got to pay for that dividend, and I think Pandit will dump his LM shares, even before he contemplates cutting the dividend.

But, as I said, this Sell Block is about more than just LM... This is about what LM's funds will have to sell, because of the redemptions.

Even though Bill Miller's performance hasn't been any good this year, he does own some worthwhile stocks.  And, because he's going to have to sell, I believe, to meet the redemptions, you could get some great buying opportunities...

On the other hand, he's going to have to sell some real clunkers too.  I don't want you to think about those.  As a matter of fact, I want you to get out of them before he crushes them with his redemption song.

.  .  .  .  .

The sells?...

Legg Mason Value Trust, the huge flailing flagship fund, run by Bill Miller, has some big positions in some real stinkers... including AIG (AIG)... They've got Countrywide (CFC)... If you want to own CFC, you should own the preferred... don't you dare own the common. And then one that I really think is...well, I'm trying to be polite, but it's very difficult, which is Capital One (COF) - sell, sell, sell!  

I don't like these stocks, and the fact that they're probably going to be hit by some huge institutional selling here, in response to Miller's investors clamoring for their money back... makes me want to tell you to use any strength to get out... 

.  .  .  .  .

But his selling should also create some buys...

He could knock down Eastman Kodak (EK), which he has a huge position in, represents 7.2% of their shares outstanding...  We're on record liking EK.  If Bill Miller's a seller of EK, I'd buy it. 

They own 5.1% of Google (GOOG)... Now maybe that's why the stock's going down.  Maybe he's knocking it down to pay some of the redemptions.  It makes sense right?  It's a big $600 stock.  That's definitely a deal that I'd take...

They own 1.2% of Unitedhealth (UNH*)...  UNH* I own for my charitable trust... I'm up nicely on it.  If he knocks that stock down to $54, I'd be a buyer of it...  It could happen.  

How about Sprint Nextel (S), which he owns?...  Now that stock is all the way down to $13  We've hated it all the way down but, at this level... He owns 1.7% of it.  It's too cheap, especially if Tim Donahue is given some money to be able to take it over, which is what should happen.  That would definitely be a buy.  At $13... $12... I want to own the stock.
 

.  .  .  .  .

When this kind of thing happens... when a high-profile manager, running tens of billions of dollars, starts to falter, and gets hit with redemptions, there are opportunities, and there are stocks to avoid. 

Bill Miller is just about the highest profile guy out there, so this is really going to create some serious negative pressure on a lot of stocks, but the most important one is Legg Mason (LM).

.  .  .  .  .

The Bottom Line!:    Legg Mason (LM)'s troubles aren't LM's alone... Don't wait for Bill Miller to sell his AIG (AIG) or his Countrywide (CFC) or his Capital One (COF).  Do take advantage if he knocks down Kodak (EK) or Sprint Nextel (S) or Google (GOOG) or UNH (UNH*)... and, hey... if you actually like LM, you should wait for Citigroup (C*) to sell at least a chunk of it before you would possibly pull the trigger.  How long are they going to kill our profits?

Jim Cramer's rating on this stock	STOCK SYMBOL	Closing price that day	Opening price next day	Full Company Name/Comments (see comments above for each)
	LM	73.43	na	Legg Mason Inc. (LM)
	AIG	56.45	na	American International Group (AIG)
	CFC	8.77	na	Countrywide Financial Corp. (CFC)
	COF	46.67	na	Capital One Financial Corp. (COF)
	EK	20.95	na	Eastman Kodak (EK)
	S	12.97	na	Sprint Nextel Corp. (S) Price target to buy:  $12-13.00
	GOOG	685.33	na	Google Inc. (GOOG)
	UNH*	56.93	na	Unitedhealth Group, Inc. (UNH*) Price target to buy:  $54.00

[ end of final segment ]