“We think MSFT (Microsoft) will need to enhance its offer if it wants to complete a deal,” Miller said in his quarterly letter to investors, which was released on Tuesday. Legg Mason is the second biggest shareholder of Internet firm Yahoo.

Miller, famous for steering the $16.5 billion Value Trust to 15 straight years of outperformance versus the Standard & Poor’s 500 index until 2006.

It should be noted that unlike Capital Research and Management - who owns both MSFT and YHOO - Mr. Miller’s fund does not own shares in MSFT (or if it does, it’s less than 1.5%, according to its top holdings).

Read more.

Note: Long YHOO

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