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And the No. 1 Stock Fund Is…

Samantha McLemore and Bill Miller of Miller Opportunity Trust won the WSJ’s latest Winners’ Circle contest for the best stock-fund performance over 12 months.

The wheel of fate has turned, putting a stock-picking legend back on top for the third time in less than a decade in The Wall Street Journal’s Winners’ Circle contest.

The second-quarter 2017 laurels go to Bill Miller, this time at the helm of a different fund—his own Miller Opportunity Trust (LMOPX)—and operating independently from Legg Mason , the firm where he made his name and which he in turn helped make a household name. Mr. Miller and fellow portfolio manager, Samantha McLemore, left Legg Mason last year.

Mr. Miller’s Baltimore-based fund beat its nearest rival by nearly 6 percentage points, with a return for the 12 months ended June 30 of 48.55%.

The quarterly Winners’ Circle contest is designed to identify which U.S. stock fund with at least $50 million in assets and a record of more than three years posted the best performance in the trailing 12 months. Index funds and exchange-traded funds don’t qualify because they aren’t actively managed; leveraged funds also aren’t included.

Mr. Miller was a top runner-up in this contest in the final quarter of 2009, when his other fund, Legg Mason Opportunity Trust, posted an 86% gain in the midst of the recovery from the financial crisis. The same fund dominated the Winners’ Circle for several quarters in a row, in 2013 and 2014, when some of the turnaround companies it held in its portfolios posted triple-digit returns in only a few months. Now, once again, Mr. Miller’s patient buy-and-hold strategy has paid off for investors, with retailer Restoration Hardware Holdings rebounding by about 110% in the past six months alone.

Mr. Miller says adding Restoration Hardware to the portfolio was originally Ms. McLemore’s idea. Her interest in the company was piqued by arguments that Restoration Hardware RH -3.19% was poised to benefit from millennial spending habits. “When the stock was hit hard last year and fell to a low of $24, we went and visited the company,” Ms. McLemore says...