Legg Mason Inc. said yesterday that Brian S. Posner is stepping down as chief executive of ClearBridge Advisors, the money management division acquired from Citigroup Inc. that is suffering from underperforming equity funds and clients who are moving their money elsewhere.
Posner, 46, is leaving March 31 to pursue "entrepreneurial activities in financial services," the Baltimore money manager said. Legg Mason said Posner's parting was amicable.
Posner said in a statement that it was "an honor and privilege" to work at Legg. He was unavailable for further comment yesterday.
Peter L. Bain, Legg's senior vice president, was appointed ClearBridge's interim chairman and will help with the transition when a new CEO is named. ClearBridge manages mutual funds under the Legg Mason Partners Funds brand.
Posner's departure comes as ClearBridge, Legg's largest equity division with $100 billion in assets, and two of the company's other well-known managers have struggled as investors pull money from slumping funds. Those funds include Bill Miller's Value Trust fund and Bruce S. Sherman's Private Capital Management fund. These managers have wide autonomy in overseeing their funds.
Legg's assets under management dropped to just under $1 trillion in the third quarter because of market losses and net client outflows, including at ClearBridge. "It's no secret that divisions are struggling," said Andrew Richards, an equity analyst at Morningstar Inc. who does not own Legg stock.
"If you listen to the conference calls in the past couple of quarters, Legg is taking quite a bit of heat because of ClearBridge," Richards said.
Posner joined Legg Mason in late 2005 to oversee the money management unit being acquired from Citigroup. In exchange, Citigroup got Legg Mason's brokerage business as part of the $3.7 billion swap. The transaction has yielded mixed results.
Posner, who was based in New York, was hired to help integrate the two firms' mutual funds as well as to upgrade technology, shore up lackluster Citigroup funds and foster a unifying culture.
"During the critical period in which we established ClearBridge, Brian helped set the firm on the right course, for which we are grateful," Legg Chief Executive Officer Mark R. Fetting said in a statement.
Posner worked with Fetting, who at the time headed the Legg Mason division that includes mutual funds and was charged with the integration. Legg Mason eventually streamlined its total mutual funds lineup, eliminating nearly a third of the 165 funds that were underperforming.
Fetting, who became chief executive in January, said one of his key initiatives is to improve the company's slumping mutual funds.
ClearBridge took on most of Citigroup's retail funds, renaming them Legg Mason Partners Funds. ClearBridge cut the number of funds from about 30 to 14, with nearly half getting new managers.
ClearBridge also oversees separately managed accounts, which are investments of stocks, bonds, cash and other securities overseen by a money manager.
In the past year, the unit also hired eight analysts to support the managers. And ClearBridge has been working to sell its funds outside of the Smith Barney brokerage.
Half of the 14 funds overseen by Posner have beaten their benchmarks over the past year, up from four funds that beat benchmarks during the past three years, according to data from Lipper, the Denver research firm.
The $1.5 billion Legg Mason Partners Capital Fund, managed by Posner and Brian Angerame, has slumped 6.6 percent in the past 12 months because of holdings in financial stocks, according to Morningstar. The fund will now be managed solely by Angerame.
Posner, who co-founded a hedge fund in 2000, worked as a mutual fund manager or analyst for 13 years, including at Fidelity Investments.
Russel Kinnel, director of mutual fund research at Morningstar, said he was surprised by Posner's departure because of his short tenure.
"One of the things he was trying to do was to build a great environment where managers could really focus on stock selection and avoid making managers to be too benchmark conscious," Kinnel said. "It's hard to read a lot into the performance given how short the tenure was."
Legg Mason shares lost $1.92, or 3 percent, to close at $62.04 yesterday on the New York Stock Exchange. The company's stock is down 14 percent since the beginning of the year.
hanah.cho@baltsun.com
Bloomberg News contributed to this article.
