Rapuano leaving Legg for hedge fund

Stock-picking executive joining Matador Capital

January 15, 2004|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

Legg Mason Inc. is losing one of its key portfolio managers to a Florida hedge fund, the Baltimore investment company announced yesterday.

Lisa O. Rapuano has been the portfolio manager of Legg's second largest fund, the Special Investment Trust; co-manager of Mid Cap separate accounts; and director of research for Legg Mason Funds Management.

The 38-year-old is joining Matador Capital Management, St. Petersburg, and will be opening an office for the hedge fund in the Baltimore area. Matador declined to comment yesterday, but said it would be putting out a statement today.

William H. Miller III, chief executive of Legg Mason Funds Management, said Rapuano is an "excellent investor" who "has made important contributions to our team and investment process."

Rapuano began her career at Legg in 1994 as an analyst, covering the technology, media and telecom sectors. Several years later, she was co-managing the Special Investment Trust with Miller, Legg's star manager whose Value Trust fund has beaten Standard & Poor's 500 index for 13 years in a row.

In 2001, she took over sole management of Special Investment, whose assets have grown to $3.37 billion. The fund gained 54.36 percent last year.

As an analyst, Rapuano's research spotlighted such gems as AOL and Amazon for inclusion in Legg's portfolios, said Christopher Traulsen, a senior fund analyst with Morningstar Inc.

"That's a tangible contribution," Traulsen said.

Jeff Tjornehoj, a research analyst with Lipper Inc. in Denver, said he's not surprised that a hedge fund would pursue Rapuano. "People are looking at the Bill Miller style of investing, and his track record against the S&P is unmatchable," Tjornehoj said. "What better manager to bring in than someone who has really grown up under the watchful eye of Bill Miller?"

Mutual fund managers have been jumping to hedge funds that often pay substantially more. The other allure of hedge funds is that they don't have to operate under the same restrictions as mutual funds, and some managers like that freedom.

Rapuano's departure will be a loss for Legg, but it shouldn't cause shareholders to abandon the fund she managed, Tjornehoj said. "Legg Mason has a deep bench," he said.

The company also announced that Miller and the funds management team will take over the running of the Special Investment and Mid-Cap separate accounts.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.