Staff and Wire Reports//November 17, 2011
//November 17, 2011
The long-time manager of Legg Mason’s flagship mutual fund, Bill Miller, is stepping down next year.
After 30 years at the helm of the Legg Mason Value Trust, the company said Thursday that Miller will cede the day-to-day reins to co-manager Sam Peters. Legg Mason Capital Management said that the transition had been in the works over the past several years.
Peters, 42, was named co-manager of the fund last year and was being groomed to take over for Miller. Legg Mason Capital Management, a unit of Baltimore-based Legg Mason Inc., said Peters will also take over Miller’s role as chief investment officer in April.
Peters, a former Fidelity Investments stock picker, joined Legg Mason in 2005. Miller initially co-managed Value Trust with Ernie Kiehne, and then took sole responsibility in 1990, the year before his winning streak started. Research firm Morningstar Inc. named him fund manager of the decade for his performance in the 1990s.
Miller, 61, will stay on as chairman and manager of the Legg Mason Capital Management Opportunity Trust.
Although the transition had been a long time in the making, it nevertheless marks the end of an era for both Legg Mason and Miller.
“For people who think of Legg Mason, they think of Bill Miller. He’s been a part of the brand for a long time,” said Todd Rosenbluth, a mutual fund analyst with S&P Capital IQ. “Investors gave this fund thought based on his name alone.”
Miller’s rise in the 1990s, helped by a bull market for stocks, was driven by his picks of inexpensive financial shares as well as out-of-favor technology companies. Two of his most successful bets were big stakes in Dell Computer Corp. and America Online Inc., which he accumulated in 1996.
Miller became known for his concentrated portfolio, often holding fewer than 50 stocks, and his style of adding to holdings as prices fell. He doubled his stake in power-supplier AES Corp. during 2002 when the stock fell 83 percent. In 2003, AES’s stock almost tripled.
Under Miller’s management, the Value Trust fund outperformed the S&P 500 index for 15 years through 2005. But the fund began faltering in 2006 and has significantly lagged its peers in recent years.
Miller’s slump started when he stayed away from energy stocks that had surged amid a commodities boom. His performance was hobbled further in 2008 as picks including U.S. insurer American International Group Inc. and Freddie Mac tumbled during the global financial crisis.
In a release, Miller noted that the transition was a “long and thoughtful” process. He said Peters had been recognized as a potential manager for the Value Trust when he was first hired in 2005.
“April 2012 is the right time for Sam to take over,” Miller said in the statement. “Over the past year, Sam and I made important adjustments to the fund’s portfolio construction and characteristics, and we’re both very pleased with how it is positioned.”
Legg Mason Capital Management, which specializes in long-term investing for institutional and retail clients, had $8.65 billion in assets under management as of Sept. 30.
Bloomberg contributed to this article.