By: jackie.sauter

The federal government has decided to rescue Freddie Mac and Fannie Mae to help get the mortgage giants — and the U.S. economy — out of a pickle.

While that might have been good news to Wall Street and stock markets around the world, local investment manager Legg Mason Inc. took yet another hit in an already difficult year.

In particular, Bill Miller, the famed fund manager behind Legg Mason Capital Management, will suffer from this move. Miller has been adding steadily to his stockpile of shares in Freddie Mac this year, at various price points (about 35 million shares when the price was in the teens this spring, and another 30 million this summer when the price was under $10). He had amassed 80 million shares as of July 31, or 12.4 percent of shares, making LMCM the largest shareholder of Freddie stock.

Analysts think Freddie’s stock will soon be worth pennies – the share price was 90 cents at 1 p.m., down $4.20 or 82 percent today. So what should Miller do with those 80 million shares of Freddie stock? Sit around and hope for a miracle or try to find someone who’s daring enough to spend $80 million on the hopes of a turnaround?

What would you do in his shoes?

DANIELLE ULMAN, Business Writer