Guest notorious546 Posted September 28, 2016 Share Posted September 28, 2016 By Daisy Maxey When Bill Miller leaves Legg Mason Inc. after more than three decades, the stock-picker famed for his streak of beating the market for more than a decade, will in a sense be returning to his roots. Mr. Miller plans to rename the $1.3 billion Legg Mason Opportunity Trust, which he began managing in 1999 and has co-managed with Samantha McLemore since 2008, Miller Opportunity Trust. He plans to buy out Legg Mason's 50% stake in LMM LLC, their joint venture which houses the funds he manages, a deal announced last month. But Mr. Miller, whose Opportunity Trust fund has endured widespread investor redemptions this year as its performance has lagged behind its benchmark, says his departure will also permit him to manage money as he did when Legg Mason was a small regional brokerage in the early 1980s. While Legg Mason Opportunity's strategy won't change, the plan is to reorganize it as a non-diversified fund, as it originally was, which will give its management team more flexibility to be more concentrated in their investments, says Neil O'Callaghan, president and chief compliance officer at LMM. "It was great being involved with Legg Mason," Mr. Miller said in an interview. But, he added, he's "a little bit nostalgic" for the time when he worked for a small company running a couple of relatively focused and relatively small funds with a lot of flexibility. If the reorganization is approved by shareholders, his firm would be in charge of its funds' distribution, a prospect Mr. Miller says he relishes. He expects that independent distribution arrangements will give his firm more freedom to reach out to investors for whom his management style is right, and to be able to communicate more nimbly and perhaps more candidly with the shareholders of Miller Opportunity Trust and the $93.7 million Miller Income Opportunity Trust, which he has managed with his son, Bill Miller IV, since its 2014 inception. "There were a variety of policies that Legg [Mason] maintains for its affiliates with respect to communicating with shareholders," he says. "One of the advantages of this transaction will be more flexibility to communicate with clients and be more expansive and perhaps more candid than we could with a very large company's oversight." Legg Mason declined to comment. Under the deal, Legg Mason Opportunity Trust and Legg Mason Income Opportunity Trust would transfer all of their assets to a new mutual-fund company that's not affiliated with Legg Mason in return for shares of the new corresponding funds. Those shares will then be distributed to shareholders. Each fund's board of trustees approved the reorganization Aug. 31, and shareholder proxies are expected to be mailed in November. If shareholders approve the reorganization, it's expected to be completed in 2017. Andrew Daniels, a fund analyst for equity strategies at Morningstar Inc., says, "There's no real change to how the fund will be run or the investment team." Legg Mason Opportunity Trust has always been a "very concentrated" and "extremely volatile" fund, Mr. Daniels says. He notes that the fund has only about 40 holdings. Legg Mason Opportunity Trust has shed 3.3% this year through Sept. 27, even as its average mid-cap blend peer rose 7% and the S&P 500 gained 7.4%, according to Monringstar Inc. "The fund, over its entire existence, has outperformed the market, but it doesn't do it every year or in some linear fashion," says Mr. Miller. Over five years through Sept. 27, Legg Mason Opportunity Trust has gained 20.9% each year on average, outpacing the S&P 500's 15.4% gain as well as the 13.2% increase of its average peer, Morningstar says. But the fund has gained just 3.5% each year on average over the 10 years through Sept. 27, lagging behind the index's 7.2% gain and the 6.7% increase of its average peer. Mr. Miller says his shareholders want long-term active management, and that's what he provides, noting that Legg Mason Opportunity Trust "doesn't look anything like" the S&P 500, its benchmark index. Its performance "will bounce around" because of its high active share and concentration, he says. In January, Mr. Miller won regulatory approval to open Miller Value Partners, a money-management firm created to oversee private partnerships and separately managed accounts. The firm will oversee products that use its value-driven investment process as well as a private account that uses a proprietary model it licensed from OpenHazards Group, which seeks to predict financial disasters using a quantitative model designed to predict natural disasters. (END) Dow Jones Newswires 09-28-16 1150ET Copyright © 2016 Dow Jones & Company, Inc. Link to comment Share on other sites More sharing options...
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