Legg Mason launching partnership

Star manager Miller will own half of firm that will run new fund

Mutual funds

October 23, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Legg Mason Inc. is going into partnership with its star mutual fund manager, William H. Miller III.

In a rare step, Miller and Legg Mason will jointly own -- 50-50 -- LMM LLC, which will oversee a new mutual fund that the standout stock picker will manage.

The fund, Legg Mason Opportunity Trust, will allow Miller to use a free-wheeling strategy in picking companies and industries that he wants to invest in.

The two are betting that Miller's star status will pull investors into the fund. Miller runs the $11.5 billion Legg Mason Value Trust, which has beaten the Standard & Poor's 500 stock index for nine consecutive years.

Last year, he was one of three mutual fund managers in the country named by Morningstar Inc., the Chicago-based mutual fund tracking company, as manager of the year.

"The investment strategy is designed to allow Bill to go anywhere he finds value," said Jennifer W. Murphy, the chief operating officer and chief financial officer of Legg Mason Fund Adviser, the adviser to the company's family of funds. "Although it is primarily a U.S. equity fund, it's not constrained by investment style or by company size or location."

Murphy could not say when the fund, which will require a minimum opening investment of $1,000, would open.

Miller will be able to stretch his legs running Opportunity Trust.

"The fund's adviser exercises a flexible strategy in the selection of securities not limited by investment style or by the issuer's location, size or industry sector," according to a prospectus filed with the Securities and Exchange Commission. "The fund invests in securities that, in the adviser's opinion, offer the opportunity for long-term capital appreciation."

Miller will be able to invest in securities that are priced at large discounts relative to their intrinsic value and companies that are undergoing financial restructuring or management reorganiza- tion, according to the filing.

Unlike the Value Trust, which is a "diversified fund," Miller will be able to make larger bets in a single company or sector.

He will also be able to invest in small, large and foreign companies. He could use a variety of techniques to invest, such as short selling, or betting that a company's shares will fall.

Miller is having another solid year. The Value Trust was up 9.17 percent for the year as of Thursday's close, compared with the S&P 500, which was up about 5.50 percent.

Special Investment Trust, a fund Miller manages with $2.1 billion in assets under management, was up 13.78 percent, 8.3 percent ahead of the S&P 500.

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