Bill Miller Beats the S&P in December

His performance for the year may be horrific, but he outpaced the index by 7 percent this month.

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Bill Miller, whose Legg Mason Value Trust achieved the unlikely feat of beating the S&P 500-stock index for 15 consecutive years, has become the fund world's punching bag.

So far this year, the fund is down a devastating 56 percent on account of bad bets on stocks including AIG, Washington Mutual, and Freddie Mac. This horrific year (combined with lackluster results in 2006 and 2007) has banished Legg Mason's crown jewel to the ranks of the worst-performing mutual funds not only for the year, but for all standard periods of measurement. Miller has been cleaning house lately, and claims to be plotting a more diversified portfolio with more emphasis on dividends and free cash flow.

Maybe it's working. As Clusterstock points out today, something went right in December: Value Trust is up 12.4 percent this month, beating the S&P's 6.8 percent return. The fund's holdings also rose from 32 investments at the end of September to 43.

Perhaps 2009 will be Miller's comeback year.