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Thursday, August 11, 2016

Bill Miller and Legg Mason Part Ways

Reported by Neil Anderson, Managing Editor

Bill Miller and Legg Mason [profile] are parting ways after 35 years together.

Bill Miller
Founder, Chairman, Chief Investment Officer
Today the famed value-equity PM confirms that he plans to buy out the 50-percent stake in his shop, LMM, that had been owned by Legg Mason. Once the deal closes, Legg Mason reveals, "Miller, together with companies he controls, will own 100% of LMM." LMM, like Legg Mason, is based in Baltimore.

The deal is expected to close around the end of 2016.

Spokespeople for Legg Mason and LMM confirm that no investment banks were involved in the deal. The pricing and terms of the deal were not disclosed.

As of July 31, LMM had $1.8 billion in AUM, most of which is in the mutual fund versions of LMM's two strategies: the $1.3-billion, two-star, seven-year-old Legg Mason Opportunity Trust and the $91.2-million, two-year old Miller Income Opportunity Trust. LMM currently serves as investment manager to the former fund and as subadvisor to the latter fund. As part of the deal, pending approval from the funds' boards and shareholders, the plan is to reorganize the two funds into new LMM funds that will be unaffiliated with Legg Mason.

Miller founded LMM in 1999. In 2013 LMM separated from affiliate Legg Mason Capital Management, and LMCM merged with Legg Mason's Clearbridge equity unit. LMM marketing consultant Liz Goodier and president and chief compliance officer Neil O'Callaghan confirm that LMM currently has 14 employees.

"This transaction affirms my ongoing commitment to managing our funds and to our investors. I am excited about the future of LMM, and our team is dedicated to our long-term, value-driven approach and to true active management," states Miller, who serves as chairman and chief investment officer of LMM. "I am thankful to Legg Mason for our 35-year relationship and to the great many people I've worked with along the way."

Joe Sullivan, chairman and CEO of Legg Mason, puts the LMM deal in the context of his "strategy of focusing on [Legg Mason's] nine diverse managers with size and scale that can be leveraged across global distribution."

"Bill has been an important part of the growth and success of Legg Mason over the years and we appreciate his many contributions," Sullivan states. "We wish Bill and his team continued success in the future."

Once the deal closes, Legg Mason spokeswoman Mary Athridge confirms, LMM "will be fully independent" from Legg Mason.

"[Miller] has been operating on his own," Athridge says. "He moved out of the building a while ago" and into separate offices for LMM.

"We kind of always anticipated that this would happen," Goodier says. "Now we're just finalizing it."

Miller, an alumnus of Washington and Lee University, served as JE Baker Company's treasurer before joining Legg Mason in 1981 as director of research and later taking over Legg Mason's equity funds management division in 1990.

Miller and Ernie Kiehne founded LMCM and co-PMed the LMCM Value Trust (then the Legg Mason Value Trust Fund) from 1982 to 1990. Miller then served as the fund's sole PM starting in 1990. Miller famously beat the S&P 500 for 15 years, and then the worm turned. He stepped down from that fund in 2012. 

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