Legg celebrates fund's 15th year Manager Miller guides Value Trust to top 2% of mutuals

April 17, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

It was a tough sell, but Raymond A. "Chip" Mason convinced brokers in the early 1980s that Legg Mason Inc. needed to offer customers a mutual fund.

Brokers looked skeptically at Mason, the Baltimore-based company's chairman and chief executive. They didn't see a benefit since the fund -- Value Trust Inc. -- had no sales fees attached.

"The hard part for the broker was: 'Why should I do this?' " Mason recalled yesterday at a luncheon downtown where the firm celebrated Value Trust's 15th anniversary and paid tribute to its manager, William H. Miller III.

Today, the fund has $2 billion in assets under management, 82,000 shareholders, and it is one of the country's best performing domestic equity mutual funds. A $10,000 investment Value Trust at its inception in 1982 would be worth $129,881 with dividends reinvested.

Miller's fund has beaten the Standard & Poor's 500-stock index six straight years. Last year it returned 38.33 percent, ranking it in the top 2 percent in performance of 8,000 mutual funds. It returned 40 percent in 1995.

So far this year, it has returned 3.9 percent as of March 31, at a time when many funds are being slaughtered by a bumpy stock market.

"Chip was afraid when we launched this fund we would never get $100 million," said W. Talbot Daley, head of marketing for Legg Mason.

Mason was Value Trust's first investor. The idea of investing in a mutual fund was so new that the firm hit a snag when Mason tried to buy shares.

"It took us two or three days to execute it [the order] because nobody knew how to process the ticket," Mason said.

Before joining Legg Mason, Miller was a chief financial officer at a manufacturing company in Pennsylvania. His wife worked at Legg, and when he visited her, he pored over stock guides and talked to the executives about companies he liked.

"He loved stocks and he loved reading about it," Mason said. "I thought this guy was in the wrong field."

So Mason made him an offer.

Miller invests in companies that are in trouble with the expectation that their prices will rise. He prides himself on thorough research and rarely selling the stocks he picks.

"This is one of the things that has served us well," Miller told the audience.

Miller, 47, co-managed the fund when it was formed and became sole manager in 1991. His age and longevity are unusual in the business. He said he is the 17th most senior equity fund manager in the country. The average age of mutual fund managers is 29 years old, and the average experience is 3.5 years.

To show their appreciation, Legg Mason's executives gave Miller two bottles of California wine and a book on securities analysis signed by investment guru Warren Buffett.

Pub Date: 4/17/97

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